An article was earlier sold at a 40% profit over cost. Later it is sold at a 20% discount on that earlier selling price. Determine the new overall profit percentage on cost.

Introduction:
Successive percentage changes often apply to different bases. Here, the discount is applied to the earlier selling price, not to cost. Convert each step carefully to the correct base.

Given Data / Assumptions:

• Original SP1 = 1.40 * C (40% profit on cost C).
• New SP2 = 20% discount on SP1 ⇒ SP2 = 0.80 * SP1.

Concept / Approach:
Chain the multipliers and then compare the final selling price with cost to get the new profit percentage.

Step-by-Step Solution:
SP1 = 1.40CSP2 = 0.80 * SP1 = 0.80 * 1.40C = 1.12CProfit% = (1.12C − C)/C * 100 = 12%

Verification / Alternative check:
Let C = Rs 100. SP1 = Rs 140. After 20% discount on 140, SP2 = Rs 112. Profit = 12 over cost = 12%.

Why Other Options Are Wrong:

• 20% / 28% / 14%: result from applying the 20% on cost or averaging percentages incorrectly.

Common Pitfalls:

• Applying the 20% discount to cost instead of to SP1.

Final Answer:
12%