A dealer allows 25% discount on the marked price of an article and gains 20%. If the cost price of the article increases by 20%, how much discount percentage should he allow on the marked price so as to earn the same percentage of profit as before?
Answer & explanation
Correct answer: option 3
Let MP = 100
SP of the article = 100 × \(\frac{3}{4}\) = Rs. 75
According to the question
Profit = 20%
120% of C.P = 75
CP of the article = 75 × \(\frac{5}{6}\) = 62.5
Again According to the question
New CP = 62.5 × \(\frac{6}{5}\) = Rs. 75
New SP = 75 × \(\frac{6}{5}\) = Rs. 90
Discount percentage = \(\frac{100 - 90}{100}\) × 100 = 10%