How much should a trader mark up his goods to achieve a 20% profit

Question

How much should a trader mark up his goods to achieve a 20% profit after offering a 25% discount on the selling price?

A. 60%
B. 50%
C. 45%
D. 40%
E. 30%

T4Star · Answer

(1 + profit %) = (1 + markup %) * (1 - discount %)
(1 + 20%) = (1 + x%) * (1 - 25%)
(1.2) = (1 + x%) * (0.75)
1.2/ 0.75 = 1+x%
1.6 = 1 + x%
0.6 = x%
x = 60%

stne · Answer

or Assume the S.P. to be  100.

After discount it becomes  75  but he still wishes to get  120

\frac{120}{75}*100=160\%

That's a  60\%  increase on  75

( Assuming that the  20\%  profit was made on the original selling price )

Ans A

Hope it helped.

yashsharma1 · Answer

If the discount is on selling price, the answer will be 50% but if the discount is on marked price, it will be 60%. I think the question can use a better wording. Ended up wasting a lot of time behind this.

suntprovident · Answer

An alternative way to solve the problem is to use numbers and in my opinion it makes it a less complicated -

1. Decode the problem -

The question states that a discount of 25% is offered on  selling price . From here what markup does the reader apply to arrive at a profit of 20% on  selling price  . Ok so key trap is selling price and not to get confused with cost.

2. Let's pick easy numbers. 100 should probably work here as it's 25 and 20 right ?

So selling price is 100, discount of 25% would be 25. New list price would be 75.

We want a profit or 20% on 100 so the selling price should be 100+20 = 120

From 120-75=45 which is what the goods need to be marked up by 45 Currency with base as 75 being the new list price.

45/75 = 60%, hence A

How much should a trader mark up his goods to achieve a 20% profit

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How much should a trader mark up his goods to achieve a 20% profit