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Frame Price

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by coolhabhi » Sun Dec 01, 2013 1:59 pm
A frame was marked up by 40% & then given a discount of 20%. If the frame cost is 500, the amount of profit earned is

A)48
B)24
C)60
D)12

I did it this way...
If the frame is 100 then marked up price would be 140 and then after discount it would be (140-28) = 112.
So profit for 100 is 12
Then for 500 it should be 60..
Is this correct?
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by Brent@GMATPrepNow » Sun Dec 01, 2013 4:26 pm
coolhabhi wrote:A frame was marked up by 40% & then given a discount of 20%. If the frame cost is 500, the amount of profit earned is

A)48
B)24
C)60
D)12

I did it this way...
If the frame is 100 then marked up price would be 140 and then after discount it would be (140-28) = 112.
So profit for 100 is 12
Then for 500 it should be 60..
Is this correct?
Great approach, coolhabhi

I should mention that the wording of the question is somewhat ambiguous.
I'm assuming that some retailer bought the frame for the wholesale price of $500, and then marked up the price by 40% and then decreased the price by 20%, and we want to know the profit.

Since $500 is a pretty easy number to work with, another approach is to just use that value.

Wholesale price: $500
40% of $500 is $200, so the new price (after the mark-up) is $700
20% of $700 is $140, so the final price (after the discount) is $560

So, profit = $560 - $500 = [spoiler]$60[/spoiler]

Cheers,
Brent
Brent Hanneson - Creator of GMATPrepNow.com
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