Question

A shopkeeper marks up an article by 25% and then offers a 20% discount. What is the net profit percentage? 
 

• A. 0%
• B. 5%
• C. 10%
• D. 15%

Hint:

For markup and discount, calculate net effect by multiplying factors: $(1 + \dfrac{\text{markup}}{100}) \times (1 - \dfrac{\text{discount}}{100})$.

Answer 1

The Correct Option is A

To find the net profit percentage, first understand how markup and discount affect the price:

1. Assume the cost price (CP) of the article is $100.
2. The shopkeeper marks up the article by 25%. So, the marked price (MP) is:
   MP = CP + (25% of CP) = 100 + 25 = $125
3. Then, a discount of 20% is offered on the marked price, so the selling price (SP) is calculated as follows:
   Discount = 20% of 125 = 25
   SP = MP - Discount = 125 - 25 = $100
4. Compare selling price to cost price to find the net profit percentage:
   Net Profit = SP - CP = 100 - 100 = $0
   Net Profit Percentage = \(\frac{\text{Net Profit}}{\text{CP}} \times 100 = \frac{0}{100} \times 100 = 0\%.

Therefore, the net profit percentage is 0%.