Question

Amrit wants to sell cars at 25% above the cost price. Due to a slump in the market, his cost reduces by 5%. He thus offers a discount of 8% due to which the sales go up by 25%. Compute the change in Amrit’s profit.

Options

• unchanged

• 5%

• 4%

• 3%

Answer 1

unchanged

Explanation:

Let the cost price of a car = ₹ 100

Then, selling price when profit percent is 25%

`=100xx125/100 = ₹ 125`

When the cost reduces by 5%

Then, a new cost price`=100xx95/100=95`

New, selling price`=125xx((100-8))/100=115`

Again Sell increased by 25%

So, profit `=(115-95)xx((100+25)/100)`

= 20 × 1.25 = 25

Hence, profit remains unchanged in two cases.