Profit & Loss Question Answers

Profit, Loss and Discounts - CAT 2007

Question 4 the day : May 2, 2006

The question for the day is a sample practice problem in profit, loss, discounts, an Arithmetic Topic and the problem provides an understanding of the concept of discount and mark up.

Question
If a merchant offers a discount of 40% on the marked price of his goods and thus ends up selling at cost price, what was the % mark up?
 

1. 28.57%
2. 40%
3. 66.66%
4. 58.33%

Correct Answer - 66.66%. Choice (3)
 

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Explanatory Answer

If the merchant offers a discount of 40% on the marked price, then the goods are sold at 60% of the marked price.

The question further states that when the discount offered is 40%, the merchant sells at cost price.

Therefore, selling @ 40% discount = 60% of marked price (M) = cost price (C)

i.e.,  (60/100) M=C

or M =(60/100)C or M = 1.6666 C

i.e., a mark up 66.66%