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A merchant purchased a jacket for $60 and then determined

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A merchant purchased a jacket for $60 and then determined

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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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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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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