Multiple choice

A bookstore owner purchased a set of novels for $120. She set the selling price so that it equaled the cost price plus a markup of 25 percent of the selling price. If the set was sold at the marked price, what was the gross profit made by the owner from the purchase and sale?

  1. $36
  2. $40
  3. $48
  4. $50
  5. $52
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Let SP be the selling price. Markup = 0.25 * SP. CP = SP - 0.25 * SP = 0.75 * SP. Given CP = 120, so 0.75 * SP = 120, SP = 160. Profit = SP - CP = 160 - 120 = 40.

AI explanation

The selling price is defined as the cost price plus 25% of the selling price, which sets up the equation S equals 120 plus 0.25S. Solving for the selling price gives 0.75S equals 120, meaning the selling price is \$160. The gross profit is the selling price minus the cost price, which is \$160 minus \$120. The gross profit made by the owner was \$40.

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