nidhis.1408 wrote:When sold at a 40% discount, a sweater nets the merchant a 20% profit on the wholesale cost at which he initially purchased the item. By what % is the sweater marked up from wholesale at its normal retail price?
a. 20
b. 40%
c. 50%
d. 80%
e. 100%
We can plug in the answers, which present the markup when the sweater is sold at its regular price.
Let the wholesale cost = 100.
Answer choice C: 50%
Regular price = 100 + .5(100) = 150.
Discounted price = 150 - .4(150) = 90.
Discounted price - wholesale cost = 90-100 = -10.
Since a 50% markup yields a 10% LOSS, the required markup must be much greater than 50%.
Answer choice E: 100%
Regular price = 100 + 1(100) = 200.
Discounted price = 200 - .4(200) = 120.
Discounted price - wholesale cost = 120-100 = 20.
Success!
The correct answer is
E.
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