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A merchant purchased a jacket for $60 and then determined a selling price that equaled the purchase price of the jacket

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A merchant purchased a jacket for $60 and then determined a selling price that equaled the purchase price of the jacket

by BTGmoderatorDC » Mon Oct 25, 2021 6:03 pm

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A merchant purchased a jacket for $60 and then determined a selling price that equaled the purchase price of the jacket plus a markup that was 25 percent of the selling price. During a sale, the merchant discounted the selling price by 20 percent and sold the jacket. What was the merchant's gross profit on this sale?

A. $0
B. $3
C. $4
D. $12
E. $15


OA C

Source: Manhattan Prep
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Re: A merchant purchased a jacket for $60 and then determined a selling price that equaled the purchase price of the jac

by Brent@GMATPrepNow » Tue Oct 26, 2021 5:17 am
BTGmoderatorDC wrote: ↑
Mon Oct 25, 2021 6:03 pm
 A merchant purchased a jacket for $60 and then determined a selling price that equaled the purchase price of the jacket plus a markup that was 25 percent of the selling price. During a sale, the merchant discounted the selling price by 20 percent and sold the jacket. What was the merchant's gross profit on this sale?

A. $0
B. $3
C. $4
D. $12
E. $15


OA C

Source: Manhattan Prep
Let x = the SELLING PRICE

A merchant purchased a jacket for $60 and then determined a selling price that equaled the purchase price of the jacket plus a markup that was 25 percent of the selling price.
We can write: x = $60 + (25% of x)
In other words, x = $60 + 0.25x)
Subtract 0.25x from both sides to get: 0.75x = 60
Divide both sides by 0.75 to get: x = 80
So the selling price is $80

During a sale, the merchant discounted the selling price by 20 percent and sold the jacket.
We can write: DISCOUNTED price = $80 - (20% of $80)
= $80 - (0.20)($80)
= $80 - $16
= $64

What was the merchant's gross profit on this sale?
Gross profit = $64 - $60 = $4

Answer: C

Cheers,
Brent
Brent Hanneson - Creator of GMATPrepNow.com
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