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Tom sold a watch to Dick at a profit of 20% and Dick sold it to Harry at a profit of 30%. If Harry paid $780 for the watch, calculate how much Tom paid for the watch.
The working solutions:
Dick paid $ (100/130 * $780) = $600 for the watch
Hence, Tom paid $ (100/120 * $600) = $500
I don't understand why the workings are done in that way...Could someone clear my doubt by explaining the above solutions? You could even explain and do the questions using your own method...Thanks..
If Tom sells the watch to Dick at a profit of 20% then it means that Dick bought the watch at 120% of its value. Likewise Harry paid 130% of the value that Dick thought it worth.
Harry payed $780. You know that Dick must have paid less that this. What we now need to know is what the 100% of 130% is. We do this by dividing 100 by 130. This give the percentage of $780 that Dick paid. Which is $600.
We then repeat this process to get what Tom paid. Using 100/120 * 600 = $500
Hope this explains it?
Thanks O3myersd! I understood the question! :)
So, that means when doing this type of question, we have to so-called work backwards right (in this case the amount that Harry paid is provided) ?
Thanks again. :)
If you were to multiply by (100%-markup) then you would be adding an incorrect step, rather than undoing a step using its inverse function..
Heres an example I remember from Square One TV..:)
I sell you my lemonade stand with an estimated value of $100 at a 20% markup for $120..
You decide to sell it back, saying you simply want to undo the sale.. You paid $120, at a 20% markup, so you decide to mark your cost down by 20%..
($120*80%=$96)..
Business markup tutorials are probably the best source for in depth discussion on it..
More or less, yep!Quote:
Originally Posted by Yunie
Thanks guys! :) :)