A shopkeeper earns a profit of 25% when he sells an article by allowing 20% discount on its marked price. If the cost price of the article is decrease

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A shopkeeper earns a profit of 25% when he sells an article by allowing 20% discount on its marked price. If the cost price of the article is decreased by 20%, how much discount percent should he allow now on the same marked price so as to earn the same percentage of profit as earlier?
1. 32%
2. 36%
3. 35%
4. 40%

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Correct Answer - Option 2 : 36%

Given :

A shopkeeper gained 25% while allowing 20% discount

Formula used :

Selling price = Marked price - discount on marked price

Selling price = cost price + profit on cost price

Calculations :

Let the initial cost price be 100x

Selling price = 100x + 25% of 100x

⇒ 125x

Selling price = Marked price - 20% of marked price

Marked price = 625x/4 = 156.25x

Now Cost price got decreased by 20%, so new cost price

New cost price = 80x

New selling price = 80x + 25% of 80x

⇒ 100x

Discount per cent on marked price to get this selling price

Discount per cent = (Marked price - selling price)/(Marked price) × 100

⇒ (156.25x - 100x)/(156.25x) × 100

⇒ 36%

∴ Discount should be 36%