Selling Price after a 20% Profit Margin is applied to an item that Cost $10

Given: Cost = $10,  Profit Margin = 20%
Profit Margin as a Decimal: 20% = 0.2
Formula:
Selling Price =  

Cost/ 1 – Profit Margin as a Decimal

Selling Price =  

$10/ 1 – 0.2

Selling Price =  

$10/ 0.8

Selling Price = $12.50
Notes:
Profit = Selling Price – Cost = $12.50 – $10 = $2.50
Markup Amount = Profit = $2.50
Markup Percentage =  

Markup Amount/ Cost

=  

$2.50/ $10

= 0.25 = 25%