Question

A shopkeeper sells an item at a 20% discount on the marked price and still makes a 25% profit on the cost price. If the cost price is Rs. 400, what is the marked price?

• A. Rs. 500
• B. Rs. 600
• C. Rs. 625
• D. Rs. 700

Hint:

In discount and profit problems, express the selling price in terms of both the marked price (after discount) and cost price (with profit) to form an equation.

Answer 1

The Correct Option is C

- Step 1: Let the marked price be $M$. The selling price after a 20% discount is $0.8M$.
- Step 2: The cost price is Rs. 400, and the shopkeeper makes a 25% profit, so the selling price is $400 \times 1.25 = 500$.
- Step 3: Equate the selling price: $0.8M = 500$.
- Step 4: Solve for $M$: $M = \dfrac{500}{0.8} = 625$.
- Step 5: Verify: If marked price is Rs. 625, discount is $0.2 \times 625 = 125$, so selling price is $625 - 125 = 500$.
Profit is $500 - 400 = 100$, which is $25%$ of 400.
- Step 6: Check options: Option (c) is Rs. 625, which matches.