PROFIT, LOSS & DISCOUNTFOR GMAT CATARPIT

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Manufacturer ( i.e. the producer)

Wholesaler (dealer) Retailer (shopkeeper)

Customer

Cost Price – The cost incurred by the manufacture or the wholesaler or the retailer ( i.e. the person who pass on the goods to another)

Selling price – The price at which one person pass on the goods to another .

Profit – The extra money a person receives by selling a product .

Profit = Selling Price (SP) – Cost Price (CP)

Loss – The less amount that a person receives by selling a product.

Loss = CP - SP

Important Formulae:

Profit Percentage = (Profit/CP) * 100

Loss Percentage = (Loss/CP) * 100

* Profit or loss is always calculated on the basis of cost price unless otherwise mentioned in the problem

Marked Price – The price written on the tag of a product . It may or may not be equal to the SP, depending upon the discount (available or not).

Discount – The amount of money which is to be paid less on the marked price (MP).

Marked Price = CP + MarkupSelling Price = MP – Discount

In general, CP<SP<MP at a profit CP=SP<MP at no profit no loss SP<CP<MP at a loss

Some Important Concepts:

1.) When two articles are sold at same price but one of them at a profit & another one at a loss & the percentage profit is the same as the percentage loss. In this case there is always a loss.

Loss (%) = (Common gain or loss/ 10)2

2.) When a person recovers the cost price of ‘m’ articles by selling ‘n’ articles (n<m), then

Profit (%) = (goods left/ goods sold) * 100

= ((m-n)/n)*100

CI/SI/ Instalments:

Simple Interest : Fixed rate of interest on principal (initial amount).

Principal: Initial amount invested /loaned/borrowed.

Amount = Principal + Interest

Compound Interest : It is the interest on interest calculated on each successive period.

Simple Interest (SI) = (P*R*T)/100

Where, P= Principal R= Rate of Interest (%) T= Time Period

A = P + (P*R*T)/100 [ for SI only ]

Given (R%) Given (t) Required (R%) Required (t)

R% annual T years r/2 (%) half- yearly

2t

R% annual T years r/4 (%) quarterly 4t

R% annual T years r/12 (%) monthly 12t

Conversion of Time Period –Rate of Interest

Compound Interest (CI) = A- P

Amount (A) = P(1+r/100)t

Difference b/w CI & SI for two years:

= P(r/100)2

Difference b/w CI & SI for 3 years: = P(r/100)2 (r/100 + 3)

Population Questions :

P = P0 ( 1 + r/100)n when population increases

P0 is the initial population

P = P0 ( 1 - r/100)n when population decreases

Installments:For SI A = [ x + (x + (x*r*1)/100) + (x +

(x*r*2)/100) + ……………..]Where X = value of each installment

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