gmatpup wrote:Please explain! Thank you
A furniture dealer purchased a desk for $150 and then set the selling price equal to the purchase price plus a markup that was 40% of the selling price. If the dealer sold the desk at the selling price, what was the dealer's gross profit from the purchase and the sale of the desk?
A. $40
B. $60
C. $80
D. $90
E. $100
We can plug in the answers, which represent the profit.
When the current answer choice is plugged in, the profit must be equal to the markup.
Answer choice C: profit = 80.
Selling price = profit + purchase price = 80+150 = 230.
Markup = 40% of the selling price = .4(230) = 92.
The profit is too small.
Eliminate A, B and C.
Answer choice D: profit = 90.
Selling price = profit + purchase price = 90+150 = 240.
Markup = 40% of the selling price = .4(240) = 96.
The profit is too small.
Eliminate D.
The correct answer is
E.
Answer choice E: profit = 100.
Selling price = profit + purchase price = 100+150 = 250.
Markup = 40% of the selling price = .4(250) = 100.
Profit = markup = 100. Success!
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