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A trader bought a car at 20% discount on its original price. He sold it at a 40% increase on the price he bought it. What percent of profit did he make on the original price?

Correct answer: C. 12%

  • A. 10%
  • B. 11%
  • C. 12%
  • D. 15%

Explanation

Take the original price as Rs.100. The trader buys the car for 80% of it, or Rs.80, and sells it for 140% of Rs.80, or Rs.112. The profit compared with the original price is Rs.112 - Rs.100 = Rs.12, or 12%. Students often choose a by subtracting the 20% discount from the 40% increase directly, ignoring that the 40% is calculated on the reduced purchase price.

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About Profit and Loss

Profit and loss compare the cost price and selling price of an item, using profit or loss percentages based on the cost price unless stated otherwise. Questions include marked price, discount, successive discounts, commission, and finding an unknown price, with care needed to distinguish discount from loss.

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