Multiple choice

A watch retailer purchases a luxury watch for $1,200 and marks it up by 25%. Later, the retailer offers a 20% discount on the marked price. What is the store's profit or loss percentage on the watch after the discount?

  1. 0% (no profit, no loss)

  2. 2% profit

  3. 4% profit

  4. 5% profit

  5. 10% profit
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Cost price = 1200. Marked price = 1200 * 1.25 = 1500. Selling price = 1500 * 0.80 = 1200. Since SP = CP, the profit/loss is 0%.

AI explanation

Using the net profit percentage formula, when a markup percentage is followed by a discount percentage, the net percentage change is calculated as (a - b - ab/100). Substituting the markup of 25% and the discount of 20%, we get (25 - 20 - (25 x 20)/100) = 5 - 5 = 0%. Therefore, the store makes no profit and no loss.

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