Multiple choice

A trader marked the price of his commodity so as to include a profit of 25%. He allowed a discount of 16% on the MP. His actual profit was

  1. 5%

  2. 9%

  3. 16%

  4. 25%
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A Correct answer
Explanation

Let CP = 100. Marked price = 125. Discount = 16% of 125 = 20. Selling price = 125 - 20 = 105. Profit = 105 - 100 = 5%.

AI explanation

Let the cost price be 100. The marked price to include a 25 percent profit is 125. By allowing a 16 percent discount on this marked price, the discount amount is 16 percent of 125, which is 20. The final selling price becomes 125 minus 20, which is 105. Comparing this selling price to the original cost price of 100 gives an actual profit of 5 percent.

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