With a 10% discount on the marked price, a seller earns a 5% profit. If the marked price is increased by 5% and two successive discounts of 5% each are offered, how much percentage profit does the seller earn?
Show answer & explanation
Correct answer: A
Explanation
The correct answer is Option1 i.e. 10.5%.
Discount on the marked price = 10%
Profit percentage = 5%
Selling price = Marked price - (Discount percentage × Marked price)/100
Cost Price = Selling Price × 100/(100 + Profit%)
Profit percentage = ((Selling price - Cost price)/Cost price) × 100
Let the marked price be Rs. 100.
With a 10% discount on the marked price, the selling price = 100 - (10/100) × 100 = 100 - 10 = 90
Cost Price when there is 5% profit = 90 × 100/(100 + 5) = 90 × 100/105 = Rs. 85.71
Consider the marked price is increased by 5% and two successive discounts of 5% each are offered.
The new marked price = 100 + (5/100) × 100 = 100 + 5 = 105
Selling price = Marked price × (100 - Discount%)/100 = 105 × (100 - 5)/100 × (100 - 5)/100 = 105 × 95/100 × 95/100 = 94.76
Profit percentage = ((Selling price - Cost price)/Cost price) × 100 = ((94.76 - 85.71)/85.71) × 100 = (9.05/85.71) × 100 = 10.5