Percentages: Question 6 – Cash discount and percentage profit

Fred sells his goods at a profit of 25%. He grants 10% discount for cash purchase to encourage early payment system. Calculate his profit percentage if all goods are sold in cash.

Solution

Given that

Profit = 25%

Selling price = (100+25) % = 125%

If discounted at 10%, discounted selling

price will be Selling price * discounted value

new selling price = 125% x 90 %  (note that 10% is for discount)

new selling price = 1.125

profit  = 1.125 – 1.00

      = 0.125

      = 12.5%

Thus percentage profit, if discounted is 12.5%