By giving 25% discount a trader earns 25% profit. If he sells the item at 10% discount, what is the profit?
- AOption (a)
10%
- BOption (b)
40%
- COption (c)
45%
- DOption (d)
50%
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Correct answer
50%
Why this answer is correct
Shortcut Trick
Ratio of CP : MP = (100 − Discount%) : (100 + Profit%)
⇒ CP : MP = (100 − 25) : (100 + 25) = 75 : 125 = 3 : 5
Let CP = 300 and MP = 500.
New Selling Price at 10% discount = 500 − 10% of 500 = 450.
Profit% = [(450 − 300) ÷ 300] × 100 = 150/300 × 100 = 50%.
∴ The correct answer is 50%.
Alternate Method
Given: First discount = 25%, First profit = 25%, Second discount = 10%.
Formula: MP/CP = (100 + Profit%) ÷ (100 − Discount%)
⇒ Let Cost Price (CP) = x
⇒ Marked Price (MP) = CP × (100 + 25) ÷ (100 − 25)
⇒ MP = x × (125 ÷ 75) = (5/3)x
⇒ New Selling Price (SPnew) = MP × (100 − 10) ÷ 100
⇒ SPnew = (5/3)x × (90 ÷ 100) = (5/3)x × 0.9
⇒ SPnew = 1.5x
⇒ Profit = SPnew − CP = 1.5x − x = 0.5x
⇒ Profit% = (Profit ÷ CP) × 100 = (0.5x ÷ x) × 100 = 50%
∴ The correct answer is 50%.
Additional Information
CP and MP Relationship
The direct formula connecting Cost Price and Marked Price is MP/CP = (100 + Profit%) / (100 − Discount%).
Successive Discounts
If two discounts d1 and d2 are given, the equivalent discount is d1 + d2 − (d1×d2)/100.
Effective Profit
Profit % is always calculated on the Cost Price unless stated otherwise, while Discount % is calculated on the Marked Price.