Question

A club and a parlor are sold for Rs 10 lakhs each, which results in a loss of 20% on the club and a gain of 20% on the parlor. What is the value of the cost price?

1. 126/6 Lakhs
2. 125/7 Lakhs
3. 125/6 Lakhs
4. 127/7 Lakhs

Answer 1

Correct Answer - Option 3 : 125/6 Lakhs

Given:

The selling price of the club and the parlor for Rs 10 lakhs each. The loss on the club is 20% and the profit on the parlor is 20%.

Formula Used:

Net Gain/Loss% = Gain% + Loss% + (Gain%×Loss%)/100

Calculation:

Let the cost price be 100 units. As shown in the formula the net loss% is given by

⇒ The Net Loss% = 20 – 20 – (20×20)/100

⇒ The Net loss% = - 4% ( Negative sign indicates the loss)

Now the loss is always on the cost price. The loss on cost price is

⇒ Total selling price = (100 – 4) = 96 units.

But the total selling price is 20 lakhs which is 96 units

⇒ 96 unit = 20 Lakhs, 1 unit = 20/96 Lakhs

⇒ The cost price = 100 unit = (100×20)/96 Lakhs = 125/6 Lakhs

∴ The cost price is 125/6 Lakhs