GMAT Quant Practice | Profit & Discounts Q14

GMAT Sample Questions | Percentages Profit Loss Word Problem

The given question is a GMAT 550 level problem solving question in Profit & Loss. This GMAT sample question tests the concept of computing profit percent made after offering a discount on the marked price.

Question 14: A merchant who marked his goods up by 50% subsequently offered a discount of 20% on the marked price. What is the percentage profit that the merchant make after offering the discount?

  1. 30%
  2. 125%
  3. 25%
  4. 20%
  5. 16.66%

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Explanatory Answer | GMAT Profit Loss Q14

Step 1 : Assume cost price and find marked price

Approach: Assume cost price as $100.

Let the cost price of the goods to be $ 100.
The merchant marks his goods up by 50%.
Therefore, his marked price = cost price + mark up.
Marked price = $100 + 50% of $100 = 100 + 50 = $150.

Step 2 : Find the discount offered and Selling price

The merchant offers a discount of 20% on the marked price.
Discount offered = 20% of 150 = $30.
Therefore, the goods are finally sold at $150 − $30 = $ 120.

Cost price is $100 and final selling price is $120.
Therefore, profit made = $20 on the cost price of $ 100.
Hence, % profit = \\frac{\text{profit}}{\text{cost price}}\\) × 100 = \\frac{20}{100}\\) × 100 = 20%.
Merchant made a profit of 20%

Choice D is the correct answer.

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