Question

A retail store pays a price of $6.25 per toy. It prices the toy at $k so that at a 25%- of sale, the store still makes a profit of 20%. Compute K

Answer 1

The store wants to make a 20% profit:

Multiply the cost of the toy by 1.20 ( cost plus 20%).

6.25 x 1.20 = $7.50

This means when the toy is sold at 25% off, it needs to be $7.50 to make the 20% profit.

When the item is 25% off, that means it would sell for 75% of the original price.

Now to find what the price needs to be before the 25% off divide the profit price by 75%

7.50 / 0.75 = $10

K = $10