# Matthew bought two cars last year. That year he sold both cars for \$ 45,000 … »amazingreveal : Nigerian Education Matthew bought two cars last year. That year, he sold both cars for \$ 45,000 each. On the one hand he made 20% profit and on the other hand he made 20% loss. What was his net gain or loss?

The options are ON, Profit of \$ 7,500, B, Loss of \$ 3,750, C, \$ 3,750 profit and D, \$ 7,500 loss. Can you try this question? Solve and compare your answer with the solution below.

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## SOLUTION TO THE QUESTION

In business and accounting, the net result is a measure of a company’s profitability. It is the income of a company minus the manufacturing costs, expenses, depreciation, interest and taxes for an accounting period.

Now let the first car be called Car 1 and the second car is called Car 2,

Analyze Auto 1 (20% profit)

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We don’t know the cost of Auto 1. So let it be x

Is 20% profit 20/100 times x

∴ x + 20/100 x = \$ 45,000
Find and cross lcm
100x + 20x = \$ 45,000 x 100
120x = \$ 4,500,000

x = 4500000/120 = \$ 37,500
Hence cost price for car 1 = \$ 37,500

Analyze Auto 2 (20% loss)

We don’t know the cost of Auto 2. So let it be x

Is 20% profit 20/100 times x

∴ x – 20/100 x = \$ 45,000
Find and cross lcm
100x – 20x = \$ 45,000 x 100
80x = \$ 4,500,000

x = 4500000/80 = \$ 56,250
Hence cost price for car 2 = \$ 56,250

Profit / loss = sales price-cost price
Tota sale price = \$ 45000 + \$ 45000 =\$ 90,000
Total cost = \$ 37,500 + \$ 56,250 = \$ 93,750

Profit / loss = \$ 90,000 – \$ 93,750 = \$ -3,750. THE ANSWER IS OPTION B

The cost price is higher than the selling price, so there is a loss of \$ 3,750

Auto 1 win: Retail Price – Cost Price = \$ 45,000 – \$ 37,500 = \$ 7,500
Auto 2 loss: Selling price – cost price = \$ 45,000 – \$ 56,250 = \$ 11,250

Hope you understand

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