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Pricing Problems
Below give problem deal with some basic principles of pricing.
Example A particular calculator has been marked up as 15% & is being sold for $78.50. How much cost did the store pay the manufacturer of the calculator?
Solution
Firstly, let's described p to be the cost which the store paid for the calculator. The stores markup onto the calculator is 15%. It means that 0.15p has been added to the original price (p) to obtain the amount the calculator is being sold for. In other terms, we have the following equation
p + 0.15 p =78.50
that we have to solve for p. Doing this gives,
1.15 p = 78.50 ⇒ p = 78.50/1.15 = 68.26087
The store paid $68.26 for the calculator. Notice that as we are dealing along with money we rounded the answer down to two decimal places.
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