Question

A dealer sells an article by allowing a 20% discount on its marked price and gains 25%. If the cost price of the article is increased by 10%, how much discount percentage should he allow now on the same marked price so as to earn the same percentage of profit as before?
1. 10%
2. 15%
3. 18%
4. 12%

Answer 1

Correct Answer - Option 4 : 12%

Formula:

SP = CP × (100 + profit%)/100

Calculation:

Let cost price of article be Rs.100.

Selling price = 100 × 125/100 = Rs.125

Marked price = 125 × 100/80 = Rs.156.25

New cost price = 100 × 110/100 = Rs.110

Profit to be earn = 125 - 100 = Rs.25

Selling price = 110 × 125/100 = Rs.137.5

Let discount percentage given be a%.

⇒ 137.5 = 156.25 × (100 - a)/100

⇒ a = 12

∴ He should give 12% discount on increased cost price.