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Master | Next Rank: 500 Posts
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by grandh01 » Mon Aug 06, 2012 5:31 pm
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
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by Anurag@Gurome » Mon Aug 06, 2012 5:39 pm
grandh01 wrote: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
Let the mark up be $M.
So, M should be 25% of the selling price 60 + M
M = 0.25 * (60 + M)
M = 15 + 0.25M
M = 20
So, the selling price = $60 + $20 = $80

Now the price of jacket after a discount of 20% will be 80 - (0.20 * 80) = $64
Therefore, gross profit on the sale = final selling price - cost of the jacket = $64 - $60 = [spoiler]$4[/spoiler]

The correct answer is B.
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by truplayer256 » Mon Aug 06, 2012 6:37 pm
Let the selling price be x.

x = 60 + 0.25(x) => 3x/4 = 60 => x = (4/3)(60) = 80

Price of jacket during sale = 80(0.8) (Due to discount) = 64

Gross profit = 64 - 60 = $4

I think Anurag meant C.
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