A person bought a car and sold it for ₹ 3,00,000. If he incurred a loss of 20%, then how much did he spend to buy the car?

(a) ₹ 3,60,000
(b) ₹ 3,65,000
(c) ₹ 3,70,000
(d) ₹ 3,75,000 ✓ UPSC's answer

Why the answer is (d)

• Let the Cost Price (CP) of the car be denoted by x.

• A loss of 20% means the Selling Price (SP) is 80% of the Cost Price.

• Therefore, the equation is 0.80 * x = 3,00,000.

• Solving for x gives x = 3,00,000 / 0.80.

• This simplifies to x = 3,00,000 * (10/8) = 3,75,000.

• Thus, the amount spent to buy the car was ₹ 3,75,000, which corresponds to option (d).

Why the other options are wrong

(a) ₹ 3,60,000: ₹ 3,60,000 would result in a loss of ₹ 60,000, which is 16.67% of the cost, not 20%.
(b) ₹ 3,65,000: ₹ 3,65,000 is not a mathematically derived value from a 20% loss on a ₹ 3,00,000 selling price.
(c) ₹ 3,70,000: ₹ 3,70,000 would result in a loss of ₹ 70,000, which is approximately 18.92% of the cost, not 20%.

Asked in the CSAT Paper II of the UPSC Civil Services Preliminary Examination 2020, held on 4 October 2020. Question and answer key: Union Public Service Commission. Explanation: UPSC Answer Check.