A vendor sells specialty gift baskets at a price of $50.00 per basket, which represents a markup of 25% above the cost to produce each basket. The vendor prepared and delivered an order of 120 baskets to a customer. However, that customer returned 15 baskets and requested a partial refund. How much should the vendor refund per basket so that the vendor makes a 20% profit on the initial cost of the 120 baskets?

A. $10
B. $16
C. $20
D. $34
E. $40

Answer: B

Source: Manhattan GMAT