Profit & Loss Question Answers

Profit, Loss and Discounts - CAT 2007

Question 4 the day : September 17, 2002
The question for the day is a sample practice problem in profit, loss, discounts.

Question
A trader buys goods at a 19% discount on the label price. If he wants to make a profit of 20% after allowing a discount of 10%, by what % should his marked price be greater than the original label price?

1. +8%
2. -3.8%
3. +33.33%
4. None of these

Correct Answer is 8% profit. Correct Choice is (1)

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Explanatory Answer

Let the label price be = Rs.100. The trader buys at a discount of 19%.
Hence, his cost = 100 - 19 = 81.

He wants to make a profit of 20%. Hence his selling price = 1.2 (81) = 97.2

However, he wants to get this Rs.97.2 after providing for a discount of 10%. i.e. he will be selling at 90% of his marked price.
Hence, his marked price M = 97.2/0.9= 108 which is 8% more than the original label price.