GMAT Prep(Used Car Dealer)

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dferm: Master | Next Rank: 500 Posts; Posts: 446; Joined: Thu Jul 26, 2007 1:07 pm; Thanked: 6 times

by dferm » Thu Aug 07, 2008 11:13 am

A used-car dealer sold one car at a profit of 25% of the dealer's purchase price for that car and sold another car a loss of 20% of the dealer's purchase price for that car. If the dealer sold each car for $20,000, what was the dealer's total profit or loss in dollars, for the two transactions combined?

A. $1000 Profit
B. $2000 Profit
C. $1000 Loss
D. $2000 Loss
E. $3334 Loss

Can someone please shed some light to this problem...?

My answer is A but it is incorrect...

Thanks...

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Source: Beat The GMAT — Problem Solving | Thu Aug 07, 2008 11:13 am

Rosen_Kralev: Newbie | Next Rank: 10 Posts; Posts: 2; Joined: Thu Aug 07, 2008 11:02 am; Location: Cambridge, MA

by Rosen_Kralev » Thu Aug 07, 2008 11:19 am

if car 1's purchase price is x, then 20000 -x is the profit from the first car (equaling 25% of x); thus, x + 25% of x = 20000 and so x = 16000
if car 2's pruchase price is y, then y - 20000 is the loss from the second car (equal to 20% of y) and so y - 20% of y = 20000 and thus y = 25000

the dealer paid x+y to buy the cars, i.e. 41000, and sold them for a total of 40000, and so he lost 1000.

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BlueRain: Senior | Next Rank: 100 Posts; Posts: 91; Joined: Sun Jul 13, 2008 10:36 pm; Thanked: 1 times; GMAT Score:770

by BlueRain » Thu Aug 07, 2008 11:20 am

IMO C.

Car A: profit of 25% on the purchase price (a)
a * (1 + 0.25) = 20000
a = 16000
profit of (20000-16000) = 4000

Car B: loss of 20% on the purchase price (b)
b * (1 - 0.20) = 20000
b = 25000
loss of (25000-20000) = 5000

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dbart06: Senior | Next Rank: 100 Posts; Posts: 75; Joined: Sun Jun 22, 2008 4:59 am; Thanked: 2 times

by dbart06 » Thu Aug 07, 2008 11:21 am

IMO C

Total sales = 40000
total cost: car 1) 20000=x(1.25) car sold for a profit of 25%
total cost: car 2) 20000=x(.8) car sold for a loss
total cost for car 1 & 2 is 41000 - told selling price of 40000 = 1000 loss

Let me know if correct & if you have any questions

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dferm: Master | Next Rank: 500 Posts; Posts: 446; Joined: Thu Jul 26, 2007 1:07 pm; Thanked: 6 times

by dferm » Thu Aug 07, 2008 11:27 am

Thanks this was a very easy question indeed.....just made it clearer to me guys....

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