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A retailer sells pashminas at a ten percent discount. If a

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by swerve » Thu Dec 27, 2018 8:50 am

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A retailer sells pashminas at a ten percent discount. If a pashmina cost him $75 and he wants to make a profit of no less than twenty percent on the cost (after the discount), what is the minimum tag price he needs to put on a pashmina?

A. 90
B. 100
C. 120
D. 140
E. 150

The OA is B

Source: Economist GMAT
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by [email protected] » Thu Dec 27, 2018 9:30 am
Hi All,

We're told that a retailer sells pashminas at a ten percent discount, a pashmina COST him $75 and he wants to make a profit of no less than twenty percent on the COST (after the discount). We're asked for the minimum tag price he needs to put on a pashmina.

To start, this question is awkwardly-worded, but the 'intent' is that the retailer will put a price on a pashmina, but then charge 10% less than THAT price. We're asked for the original (pre-discount) price that is put on the pashmina. This question can be solved in a couple of different ways, including by TESTing THE ANSWERS. Let's start with Answer B first...

Answer B: $100

IF... the tag price = $100, then....
the discounted price = $100 - (.1)($100) = $100 - $10 = $90
the discounted price is $90 - $75 = $15 more than the cost of the pashmina
$15/$75 = 1/5 = 20% of the cost
This is an exact match for what we were told, so this must be the answer.

Final Answer: B

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by Scott@TargetTestPrep » Mon Feb 04, 2019 5:24 pm
swerve wrote:A retailer sells pashminas at a ten percent discount. If a pashmina cost him $75 and he wants to make a profit of no less than twenty percent on the cost (after the discount), what is the minimum tag price he needs to put on a pashmina?

A. 90
B. 100
C. 120
D. 140
E. 150

The OA is B

Source: Economist GMAT
We know that the minimum profit will be 75 x 0.2 = $15. Thus, the retailer needs to collect at least 75 + 15 = $90 cash from the customer for a pashmina.
We need to determine what the tag price would need to be such that a 10% discount would yield 90 dollars. Letting p = the tag price, we have:

0.9p = 90

p = 100

Answer: B

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