Multiple choice

A retailer allows a trade discount of 20% and a cash discount of 6.25% on the marked price of the products and makes a net profit of 20% on the cost. By what percentage are the products marked up by him?

  1. 40%

  2. 50%

  3. 60%

  4. 70%

  5. 80%
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Let MP be marked price, CP be cost price. Selling Price = MP * 0.80 * (1 - 0.0625) = MP * 0.80 * 0.9375 = 0.75 * MP. Profit is 20%, so SP = 1.2 * CP. Thus, 0.75 * MP = 1.2 * CP. MP/CP = 1.2 / 0.75 = 1.6. The markup is 60%.

AI explanation

Let the cost price be 100; to make a 20% net profit, the final selling price must be 120. The final selling price is also the marked price multiplied by (1 - 0.20) for the trade discount and (1 - 0.0625) for the cash discount, making the equation 120 = Marked Price times 0.80 times 0.9375. Solving this gives 120 = Marked Price times 0.75, so the marked price is 160. This means the products are marked up by 60%.

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