Tina owns a car dealership. She paid $50,000 for each vehicle and wants to make 25% on each car sale. What is Tina's selling price?

Tina owns a car dealership. She paid $50,000 for each vehicle and wants to make 25% on each car sale. What is Tina's selling price?

• A. $62,500
• B. $72,500
• C. $37,000
• D. $65,500

Answer: (A)

The price is found by adding a 25% markup on the cost. Compute 25% of the cost: 0.25 × 50,000 = 12,500. Add that to the cost: 50,000 + 12,500 = 62,500. So the selling price is 62,500. (If you interpreted 25% as a margin on the selling price, you’d get about 66,667, which isn’t among the options, so the problem uses markup on cost.)

The price is found by adding a 25% markup on the cost. Compute 25% of the cost: 0.25 × 50,000 = 12,500. Add that to the cost: 50,000 + 12,500 = 62,500. So the selling price is 62,500. (If you interpreted 25% as a margin on the selling price, you’d get about 66,667, which isn’t among the options, so the problem uses markup on cost.)