Normal mark-up on a discounted item?

• Apr 14th 2007, 06:00 AM
thecapaccino
Normal mark-up on a discounted item?
A store sells a TV at a 25% discount but still makes a gross profit of 25% of the cost. What is the normal mark-up (i.e. profit without the discount)??

I think the answer is 50% but I can figure out how to rationally set the problem up to get this answer.
• Apr 14th 2007, 06:26 AM
CaptainBlack
Quote:

Originally Posted by thecapaccino
A store sells a TV at a 25% discount but still makes a gross profit of 25% of the cost. What is the normal mark-up (i.e. profit without the discount)??

I think the answer is 50% but I can figure out how to rationally set the problem up to get this answer.

Let the cost be c, and the normal mark-up x, then the bormal price is:

P = c(1+x)

discounting this by 25% means the store sells for:

D = 0.75 P

which is a gross profit of 25%, so:

D = 1.25 c

so we have:

0.75 c (1+x) = 1.25 c

which after cancelling the c and rearranging gives:

(1+x) = 1.25/0.75 ~= 1.667,

so th normal markup is ~=0.667 of 66.7%.

RonL
• Apr 14th 2007, 06:51 AM
thecapaccino
Is there an alternative method?
I do get this method of solving the problem...but I am just wondering if you have another way to solve the problem.

I think I would have a tough time solving a similar equation. If not, then that is fine...just trying:-)