A shopkeeper buys an item for Rs. $1{,}200$ (inclusive of $20\%$ tax) and sells it for Rs. $1{,}320$…

A shopkeeper buys an item for Rs. $1{,}200$ (inclusive of $20\%$ tax) and sells it for Rs. $1{,}320$ (inclusive of $10\%$ tax). His real profit (excluding tax) on the sale is
  1. Rs. $0$
  2. Rs. $100$
  3. Rs. $200$
  4. Rs. $300$

Solution

Cost (excl tax) $= \dfrac{1200}{1.20} = 1000$. Sale (excl tax) $= \dfrac{1320}{1.10} = 1200$. Profit $= 1200 - 1000 = 200$.

Asked in: IMO

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