# Why is the following % profit answer wrong

The question is:

A merchant buys an old carpet for $25 dollars.He spends 15 dollars to have it returned to to good condition and then sells it for 50 dollars . What is percent profit of his total investment ? The answer is 20% and i get 40% . What am i doing wrong ? Here is how i solved it: Buying price =$25

Selling price = 50

Profit = 25 - 15 = 10

%change = (Diff/Orig) x 100 = (10/25) x 100 = 40%

• The sale price is $\$50$, his total investment was$\$40$. Thus his profit is $\$10$. That looks to me like a$25\%$return on his investment$(10/40)$; alternatively,$20\%$of the sale price was profit$(10/50)$. – in_mathematica_we_trust Jun 14 '12 at 13:31 ## 1 Answer I would have said that he made a$25$% profit: he spent$\$40$ and got back $\$50$, for a profit of$\$10$, so his profit is $\frac{10}{40}=\frac14$, or $25$%, of his investment. The only way that I can see to get a profit of $20$% is to figure profit on the basis of the selling price: his profit is $\frac{10}{50}=\frac15$, or $20$%, of his selling price.

Your basic error is not realizing that you have to count all of his costs together: the effective cost to him of the saleable rug was $\$25+\$15=\$40\$.

• Thanks for pointing that out – Rajeshwar Jun 14 '12 at 14:26