Question

A shopkeeper pays 12% of the cost price as tax while purchasing an item whose cost is Rs.500. He wants to earn a profit of 20% after giving a discount of 16% on the marked price. So, the marked price should be:
1. Rs. 780
2. Rs. 960
3. Rs. 840
4. Rs. 800

Answer 1

Correct Answer - Option 4 : Rs. 800

Given:
CP of item = Rs.500

Tax payed on purchasing = 12% 

Profit % while selling = 20%

Discount % given while selling = 16%

Concept Used:

Profit value = {(100 + % Profit)/100} × CP

Discounted price = {100/(100 – % Discount)} × CP

Calculation:

CP = Rs.500

After-tax paid CP,

⇒ 112/100 × 500

⇒ 560

He wants a profit of 20%

The selling price should be,

⇒ 120/100 × 560

⇒ Rs. 672

The discount he wants to give is 16%,

⇒ 100/84 × 672

⇒ 800

∴ The marked price of the article is Rs. 800.