A watch passes through three hands and each gains 25%. If the third seller sells the watch for Rs.1,250. the cost price of the watch to the first seller is:

Correct option is A

Given:

Each seller gains 25% on the cost price.

The third seller sells the watch for Rs. 1,250. 

Formula Used: ​

​$$\text{Selling Price} = \text{Cost Price} \times \left( 1 + \frac{\text{Profit \%}}{100} \right)$$​​

Solution:

Let the cost price of the watch for the first seller be x

The first seller gains 25% profit So

Selling price of the first seller = x + 25% of x = x + 0.25x = 1.25x 

The second seller also gains 25% profit on the price they paid (which is 1.25x)

Selling price of the second seller = 1.25x + 25% of 1.25x = 1.25x + 0.25 × 1.25x = 1.25x × 1.25 = 1.5625x

The third seller gains 25% profit on the price they paid (which is 1.5625x),The final selling price is given as Rs. 1,250:

Selling price of the third seller = 1.5625x + 25% of 1.5625x = 1.5625x × 1.25 = 1,250 

​$$1.5625x×1.25=1,250$$ 

​$$x= \frac{1250}{1.25×1.5625}$$  

​$$x = 640$$ 

Thus the cost price of the watch to the first seller is Rs. 640.

​