Question : A merchant purchases a wristwatch for Rs. 450 and fixes its list price in such a way that, after allowing a discount of 10%, he earns a profit of 20%. Find the list price of the watch.
Option 1: Rs. 480
Option 2: Rs. 450
Option 3: Rs. 600
Option 4: Rs. 540
Correct Answer: Rs. 600
Solution :
Cost price of the watch = Rs. 450
Profit percentage = 20%
The selling price of the watch = cost price + profit
= $450 + 20$% of $450$
= $450 + \frac{20 × 450}{100}$
= $450+\frac{9000}{100}$
= $450 + 90$
= $540$
Discount = 10%
⇒ Selling price + 10% of list price = list price
⇒ 90% of list price = 540
⇒ List price = $\frac{540 × 100}{90}$ = Rs. $600$
Hence, the correct answer is Rs. 600.
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