Multiple choice

A dealer allows 25% discount on the marked price of an article and gains 20%. If the cost price of the article increases by 20%, how much discount percentage should he allow on the market price so as to earn the same percentage of profit as before?

  1. 8.5%

  2. 10%

  3. 12%

  4. 7.25%
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Let the marked price be M and cost price be C. Initially, selling price after 25% discount is 0.75M, which gives 20% profit, so 0.75M = 1.2C, meaning M = 1.6C. When cost increases by 20%, new CP = 1.2C. To maintain 20% profit, new SP = 1.44C. If discount is d%, then (1-d/100) × 1.6C = 1.44C, giving d = 10%.

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