A trader earns 20% profit by selling an article. If he increases the price of the article by Rs. 130, his gain percentage increases to 28%. What is the cost price of the article?

Options

A. Rs. 1,620
B. Rs. 1,650
C. Rs. 1,600
D. Rs. 1,625

Answer

To solve the problem, let's denote the cost price of the article as \( CP \).

1. **Understanding the Selling Price with 20% Profit**:
- If the trader earns a 20% profit, the selling price (SP1) can be calculated as:
\[ SP1 = CP + 0.20 \times CP = 1.20 \times CP \]

2. **Understanding the Selling Price with 28% Profit**:
- If the trader increases the price by Rs. 130, his profit increases to 28%. The new selling price (SP2) can be calculated as:
\[ SP2 = CP + 0.28 \times CP = 1.28 \times CP \]
- According to the problem, the difference between SP2 and SP1 is Rs. 130:
\[ SP2 - SP1 = 130 \]

3. **Setting Up the Equation**:
- Substitute the expressions for SP1 and SP2 into the equation:
\[ (1.28 \times CP) - (1.20 \times CP) = 130 \]

4. **Simplifying the Equation**:
- Combine like terms:
\[ 1.28 \times CP - 1.20 \times CP = 0.08 \times CP \]
- Therefore, we have:
\[ 0.08 \times CP = 130 \]

5. **Solving for Cost Price (CP)**:
- To find \( CP \), divide both sides by 0.08:
\[ CP = \frac{130}{0.08} = 1625 \]

So, the cost price of the article is Rs. 1625.