GMAT PS #2

[imadummy]

Whenever Bianca travels to Italy she brings back Gucci bags that she sells to her friends. The bags she buys in Italy she gets at a 60% discount to American prices. She sells the bags to her friends at a 25% higher price than what she paid for them. After one trip, she sells bags to her friends that would have $4000 in American Stores. What is Bianca's profit?


400
600
1600
2200
2400

[VP_RedSoxFan]

Working backwards, we can calculate that the $4000 in "American" prices was purchased in Italy by Bianca at 60% off, so $1,600 (don't confuse the discount amount with the actual cost here).

The question says that Bianca sells them for 25% more than she paid, which would exactly equal her profit...25% of $1,600 = $400

Answer = [A]

Hope this helps, good luck. Still love the username, makes me chuckle...

[imadummy]

You were right on Red Sox. I took the discount amount of $2,400 instead of the $1,600 when I calculated the 25% profit.

[Jeff@TargetTestPrep]

Whenever Bianca travels to Italy she brings back Gucci bags that she sells to her friends. The bags she buys in Italy she gets at a 60% discount to American prices. She sells the bags to her friends at a 25% higher price than what she paid for them. After one trip, she sells bags to her friends that would have $4000 in American Stores. What is Bianca's profit?


400
600
1600
2200
2400

Note: We must assume that the question is asking about a single bag.

Since Bianca sold a bag that would have cost $4,000 in American stores, she actually paid 0.4 x 4,000 = $1,600 for the bag. She then sold the bag for 1.25 x 1600 = $2,000. Thus, she made a profit of $400.

Answer: A