The Cell Kios Buys Android Smartphones at $550 Less 40

question 8

Short Answer

The Cell Kios buys Android smartphones at $550 less 40% and 10%. The price is marked up to allow for overhead of 50% of cost and profit of 35% of cost. The unit on display in the store is scratched. What rate of markdown from the regular price can the store offer if it is to recover only half of the unit overhead costs?

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Definitions:

Discount Rate

The interest rate charged to commercial banks and other financial institutions for loans received from a country's central bank.

Reserve Requirement

This is a regulation set by central banks requiring banks to hold a certain percentage of deposits and notes in reserve, either in their vaults or on deposit with the central bank, as a precaution against bank runs.

Actual Reserves

The total amount of funds that a bank has in its reserve account plus any cash on hand, used to satisfy central bank requirements and handle withdrawals.

Excess Reserves

Bank reserves exceeding the reserve requirements set by the central bank, available for lending.