Ram purchased a watch at a cost of \(\left(\frac{9}{10}\right)^{\text{th}}\) of the original cost and sold at 8% more than the original cost. His profit/loss is
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → 20% profit
Profit per cent is always worked out on the cost price of the person who sells, here the price Ram paid, not the original cost of the watch.
Assuming the original cost to be 100:
Ram’s cost price \(\displaystyle =\frac{9}{10}\times100=90\)
Selling price \(=100+8=108\) (8% more than the original cost)
Profit \(=108-90=18\)
Profit per cent \(\displaystyle =\frac{18}{90}\times100=20\%\)
The figure 18% in Option (3) is the profit taken on the original cost of 100; on Ram’s own cost price of 90, the same profit of 18 is 20%.