A shopkeeper marked his goods 40% higher than their cost price and allows 20% discount on every item. Find his net profit percentage.
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → 12%
The discount is taken on the marked price, which is itself 40% above the cost price, so the two changes act one after the other.
Assuming the cost price to be 100:
Marked price: 140
Selling price after 20% discount: \(140\times0.8=112\)
Profit: \(112-100=12\), that is 12%
Shortcut:
Two successive changes of \(a\%\) and \(b\%\) give a net change of \(a+b+\displaystyle\frac{ab}{100}\) percent.
Here \(40+(-20)+\displaystyle\frac{40\times(-20)}{100}=20-8=12\%\)