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If a merchant makes a profit of 20% based on the selling...

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If a merchant makes a profit of 20% based on the selling...

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If a merchant makes a profit of 20% based on the selling price of an article, what percent does the merchant makes on the cost?

A. 20
B. 40
C. 25
D. None of these

The OA is C.

I'm confused by this PS question. Experts, any suggestion about how can I solve it? Thanks in advance.

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GMAT/MBA Expert

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Hello LUANDATO.

We have to look at this question carefully.

Let's say that the selling price is $100.

Then, 20% profit means that the cost price is $80 and $20 is the profit obtained.

Now we need to find what percent of $80 represents $20:

$80--------------100%
$20---------------x%

Therefore, $$x=\frac{20\cdot100}{80}=\frac{200}{8}=25\%.$$ Hence, the merchant made a 25% on the cost price.

This implies that the correct answer is C.

I hope it helps you.

Feel free to ask me again if you have a doubt.

Regards.

_________________
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