Question : A trader marked the price of a commodity to include a profit of 25% but allowed a discount of 16% on the marked price. His actual profit will be:
Option 1: $16\%$
Option 2:
$25\%$
Option 3:
$5\%$
Option 4:
$9\%$
Correct Answer:
$5\%$
Solution :
Let the cost price as $\mathrm{Rs.}\;\mathrm{C}$ and the marked price as $\mathrm{Rs.}\;\mathrm{M}$.
The trader marked the price of the commodity to include a profit of $25\%$.
$\mathrm{M = C + 0.25C = 1.25C}$
The trader allowed a discount of $16\%$ on the marked price.
The selling price $ = \mathrm{M - 0.16M = 0.84M = 0.84 \times 1.25C = 1.05C}$
The actual profit $=\mathrm{\frac{1.05C-C}{C}×100=5\%}$
Hence, the correct answer is $5\%$.
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