Question

If the profit on the selling price is 20%, find the actual profit percentag

• A. 0.15
• B. 0.25
• C. 0.3
• D. 0.2
• E. None of these

Answer 1

The Correct Option is B

The correct answer is option (B):

0.25

Let's break down this profit calculation. The problem states that the profit is 20% *on the selling price*. This is key. We need to find the profit percentage relative to the *cost price*.

Here's how to solve it:

1. **Assume a Selling Price:** Let's assume the selling price is $100 for easy calculation.

2. **Calculate the Profit:** The profit is 20% of the selling price, so profit = 0.20 * $100 = $20.

3. **Calculate the Cost Price:** The cost price is the selling price minus the profit. Cost price = $100 - $20 = $80.

4. **Calculate the Profit Percentage (relative to cost price):** Profit percentage = (Profit / Cost Price) * 100. So, Profit percentage = ($20 / $80) * 100 = 25%.

Therefore, the actual profit percentage is 25%. This is why the correct answer is 0.25 (which represents 25% in decimal form). We are looking for the percentage relative to the initial investment, not the sale price.