A trader sells an item for ₦120 at 20% profit. Cost price?

**The reasoning** When you make 20% profit, you're selling at 120% of the cost price (100% original + 20% profit). So: Selling Price = Cost Price × 1.2 We know SP = ₦120, so: ₦120 = Cost Price × 1.2 Cost Price = ₦120 ÷ 1.2 = **₦100** Check: ₦100 + (20% of ₦100) = ₦100 + ₦20 = ₦120 ✓ This is the **percentage profit formula**: If SP = CP + profit, then SP = CP(1 + profit%). **Why the wrong options tempt you** - **₦96**: You calculated 20% of ₦120 (= ₦24) then subtracted it. Wrong! That 20% should be based on the *cost price*, not selling price. - **₦144**: You added 20% of ₦120 to ₦120. You went the wrong direction entirely. - **₦150**: Random miscalculation, perhaps confusing profit with discount formulas. **Quick takeaway** Profit percentage is always calculated on the **cost price**, not selling price—so divide the selling price by (100% + profit%) to work backward.