Profit & Loss Question Answers

Profit, Loss and Discounts - CAT 2007

Question 4 the day : July 22, 2003
The question for the day is from the topic of Profit & Loss. It provides an understanding of the different terms such as Cost Price, List Price, Selling price and margins.

Question
A merchant marks his goods up by 75% above his cost price. What is the maximum % discount that he can offer so that he ends up selling at no profit or loss?

1. 75%
2. 46.67%
3. 300%
4. 42.85%

Correct Answer - 42.85%. Choice (4)

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Explanatory Answer

Let us assume that the cost price of the article = Rs.100
Therefore, the merchant would have marked it to Rs.100 + 75% of Rs.100 = 100 + 75 = 175.

Now, if he sells it at no profit or loss, he sells it at the cost price.
i.e. he offers a discount of Rs.75 on his selling price of Rs.175

Therefore, his % discount = (75/175)*100 = 42.85%