Question : What percentage above the cost price should a seller mark his goods so that, after allowing a discount of 20% on the marked price, he can earn a profit of 4%?
Option 1: 25%
Option 2: 28%
Option 3: 42%
Option 4: 30%
Correct Answer: 30%
Solution :
Discount = 20%
Profit = 4%
Let the cost price (CP) be 100
Profit = 4% of 100 = $\frac{4}{100}\times 100 = 4$
Selling Price of the product, SP = 100 + 4 = 104
Let the Marked Price (MP) be x.
Discount = $\frac{20}{100}\times \text{x}=\frac{1}{5}\text{x}$
MP – Discount = SP
⇒ $\text x - \frac{1}{5}\text{x}$ = 104
⇒ $\frac{5\text x - \text x}{5}$ = 104
⇒ $\frac{4\text x}{5}$ = 104
⇒ x = 130
Market Price (MP) = Rs. 130
Amount of MP above CP = MP – CP = 130 – 100 = Rs. 30
Percentage = $\frac{30}{100}\times 100= 30\%$
Hence, the correct answer is 30%.
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