Rastis 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 represent the markup when the sweater is sold at its regular price.
When the correct answer choice is plugged in, the discounted price of the sweater will net a 20% profit.
Let the wholesale cost = 100.
Answer choice D: 80%
Regular price = 100 + (0.8)(100) = 180.
Discounted price = 180 - (0.4)(180) = 108.
Discounted price - wholesale cost =108-100 = 8.
The profit is too small.
For the profit to increase, the required markup must be greater than 80%.
The correct answer is
E.
Answer choice E: 100%
Regular price = 100 + 1(100) = 200.
Discounted price = 200 - .4(200) = 120.
Discounted price - wholesale cost = 120-100 = 20.
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