A merchant purchased a jacket for $60 and then determined

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BTGmoderatorDC: Moderator; Posts: 7187; Joined: Thu Sep 07, 2017 4:43 pmFollowed by: 23 members

by BTGmoderatorDC » Wed Dec 25, 2019 5:49 pm

A merchant purchased a jacket for $60 and then determined a selling price that equaled 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

OA C

Source: Official Guide

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Source: Beat The GMAT — Problem Solving | Wed Dec 25, 2019 5:49 pm

SampathKp: Senior | Next Rank: 100 Posts; Posts: 62; Joined: Wed Nov 13, 2019 9:42 pm

by SampathKp » Thu Dec 26, 2019 3:08 am

BTGmoderatorDC wrote:A merchant purchased a jacket for $60 and then determined a selling price that equaled 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

Cost price of Jacket = $60
Let the Selling Price of Jacket be X

Given Information X = 60+ X/4 ( Selling price is equal to Cost price ($60) + 25% of Selling price (X/4)

Solving for X in the above equation we get X = 80. But it is also given that merchant sold the jacket at 20% discount which is $64

Profit made by merchant is selling price after discount - purchase price . $64 -$60 = $4

Answer is C

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Brent@GMATPrepNow: GMAT Instructor; Posts: 16207; Joined: Mon Dec 08, 2008 6:26 pmFollowed by: 1268 members; Location: Vancouver, BC; Thanked: 5254 times; GMAT Score:770

by Brent@GMATPrepNow » Thu Dec 26, 2019 7:12 am

BTGmoderatorDC wrote:A merchant purchased a jacket for $60 and then determined a selling price that equaled 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

OA C

Source: Official Guide

Let x = the SELLING PRICE

A merchant purchased a jacket for $60 and then determined a selling price that equaled the purchase price of the jacket plus a markup that was 25 percent of the selling price.
We can write: x = $60 + (25% of x)
In other words, x = $60 + 0.25x)
Subtract 0.25x from both sides to get: 0.75x = 60
Divide both sides by 0.75 to get: x = 80
So the selling price is $80

During a sale, the merchant discounted the selling price by 20 percent and sold the jacket.
We can write: DISCOUNTED price = $80 - (20% of $80)
= $80 - (0.20)($80)
= $80 - $16
= $64

What was the merchant's gross profit on this sale?
Gross profit = $64 - $60 = $4

Answer: C

Cheers,
Brent

Brent Hanneson - Creator of GMATPrepNow.com

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