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Profit and Loss
In what proportion must water be added to spirit to gain 20% by selling it at the cost price?
Explanation and memory cue
To gain 20% by selling at cost price, the spirit is effectively sold at 80% of its original price due to dilution. Let the ratio of water to spirit be x:1. The cost price of the mixture is the cost of spirit only, but the selling price is the cost price of the mixture. Setting up the equation: (1 volume spirit) / (1 + x volume mixture) = 80%, solving gives x = 0.4 or 2:5 water to spirit.