Question

Ramesh sells a mobile phone for 18,000 and thereby makes a profit of \(20\%\). If he wishes to make a profit of \(25\%\), by what percentage he must increase the current selling price of the mobile phone?

• A. \(4\%\)
• B. \(4.17\%\)
• C. \(5\%\)
• D. \(5.17\%\)

Answer 1

The Correct Option is B

Step 1: Let the cost price of the mobile phone be C. Since Ramesh makes a profit of 20%, we have:

\[ 18,000 = C \times \left(1 + \frac{20}{100} \right) = C \times 1.2. \]

Solving for C:

\[ C = \frac{18,000}{1.2} = 15,000. \] 

Step 2: Now, Ramesh wants to make a profit of 25%, so the new selling price should be:

\[ \text{New Selling Price} = C \times \left(1 + \frac{25}{100} \right) = 15,000 \times 1.25 = 18,750. \]

Step 3: The percentage increase in the selling price is:

\[ \frac{18,750 - 18,000}{18,000} \times 100 = 4.17\%. \]

Conclusion: The percentage increase required is 4.17%.