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A hardware supplier buys a power drill for $80 and prices it to earn a profit equal to 25 percent of its cost. At what price does the supplier sell the drill?
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Correct answer
C
Profit is 25 percent of cost = 0.25 × $80 = $20, so selling price = $80 + $20 = $100, equivalently $80 × 1.25 = $100.
(A) stops at the $20 profit; (B) divides instead of multiplies; (D) adds a flat 25; (E) inflates the markup to 75 percent.
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