The price of an article, passing through three hands, rises on the whole by 61%. If the first and the second sellers earned 15% and 20% profit respectively, find the percentage profit earned by the third seller.
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → \(\frac{100}{6}\%\)
Each seller’s profit per cent is worked out on his own cost price, the price he paid the seller before him. The percentages are therefore applied one after another, not added.
The prices along the chain (assuming the original price to be 100):
The first seller sells at 15% profit: \(100\times1.15=115\)
The second seller sells at 20% profit: \(115\times1.20=138\)
The final price is 61% above the original: 161
The third seller’s profit (on his cost of 138):
Third seller’s profit \(=161-138=23\)
Profit per cent \(\displaystyle=\frac{23}{138}\times100=\frac{1}{6}\times100=\frac{100}{6}\%\), about 16.67%