Problem Solving

A merchant purchased a jacket for $60 and then determined a selling price that equalled 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

Q. A merchant purchased a jacket for $60 and then determined a selling price that equalled 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?

Ans: Let the mark up be $x. So selling price will be 60 + x.
The mark up will be 25/100 (60 + x) = x (as per info given)
after calculation x comes to 20. Therefore selling price will be 60 + 20 = 80
But it is mentioned that 20% discount is given. Hence actual selling price will be 80% of 80 = 64
Thus, the gross profit will be 64 - 60 = $ 4

Hope this helps.

Regards
MSD