The profit earned when an article is sold for Rs 1,320 is 3 times the loss incurred when it is sold for Rs 960. At what price should the article be sold to earn a 20% profit?
Answer & explanation
Correct answer: option 4
The correct answer is Option (4) → Rs 1,260
Let the cost price be \(C\). The profit at the higher price is \(k\) times the loss at the lower price, which gives one equation in \(C\).
\(1320-C=3(C-960)\)
\(1320+2880=4 C\), so \(C=1050\)
Price for 20% profit \(=1050\times1.2=1260\)
The article should be sold for Rs 1,260.
Why the other options are incorrect
Option (1) Rs 1,476 — Incorrect. This reads the condition the other way round (the loss is 3 times the profit), which gives a cost price of Rs 1230.
Option (2) Rs 1,368 — Incorrect. This takes the cost price as the plain average of the two selling prices; that is right only when the profit equals the loss.
Option (3) Rs 1,050 — Incorrect. This is the cost price itself; the question asks for the price that gives a 20% profit.