Single correct option
A trader marks his goods 50% above the cost price and then allows two successive discounts of 10% and 4% on the marked price. What is his overall profit percentage?
- A. 29.6%
- B. 28%
- C. 30%
- D. 27.5%
Show answer and solution
Answer: (A) 29.6%
Take the cost price as 100. Marked price = 150.
After a 10% discount: 150 × 0.9 = 135. After a further 4% discount: 135 × 0.96 = 129.6.
Selling price = 129.6 on a cost of 100, so the profit is 29.6%.
Why not 36% (50 − 14)? Successive discounts multiply, not add: the combined discount factor is 0.9 × 0.96 = 0.864, giving 150 × 0.864 = 129.6.
Tip: For chains of percentage changes, multiply the factors (1.5 × 0.9 × 0.96 = 1.296).
After a 10% discount: 150 × 0.9 = 135. After a further 4% discount: 135 × 0.96 = 129.6.
Selling price = 129.6 on a cost of 100, so the profit is 29.6%.
Why not 36% (50 − 14)? Successive discounts multiply, not add: the combined discount factor is 0.9 × 0.96 = 0.864, giving 150 × 0.864 = 129.6.
Tip: For chains of percentage changes, multiply the factors (1.5 × 0.9 × 0.96 = 1.296).
Saved on this device. Sign in or create a free account to keep it on every device.