Let the original cost price be Rs ‘x’ Reduced cost price = (100 – 20)/100 × x = 0.8x Initial profit = 100% of CP = x Extra profit due to cost price reduction = x – 0.8x = 0.2x New profit margin = New profit/CP × 100 ⇒ (x + 0.2x) / (0.8x) × 100 = 150%