What's the percent profit

Question

Each time you fill up a drink from the soda fountain, it uses $.05 worth of product. If you charge $1.99 for a fountain drink and have free refills, what is your percentage profit on a customer that gets three free refills?

Answer 1

the percentage profit would be given by

 

( 1.99 - 0.20) / 1.99 * 100

 

= (1.79 / 1.99) * 100

 

=  0.899

 

= 89.9%

Answer 2

A customer who gets three free refills is using four drinks' worth of product - the initial purchase, plus the three refills.  Four drinks cost you 4 * .05 = $.20. 

 

If he's charged $1.99 for the drink, your profit on him is $1.99 - $.20 = $1.79, which means your percentage of profit is the profit divided by the income:

 

1.79/1.99 = .899 = 89.9%