Questions: Stern Co. purchased an item for 12 and initially priced the item to sell for 16. Then the company subsequently increased the selling price to 18 before lowering the selling price to 13. Stern then raises the selling price to 14. What is the net markdown? a. 4 b. 3 C. 2 d. 1

Solution Steps

To find the net markdown, we need to compare the final selling price with the highest selling price that was set. The net markdown is the difference between the highest price and the final price.

The initial selling price of the item was \( P_1 = 16 \). The highest selling price reached was \( P_{max} = 18 \). The final selling price after all adjustments is \( P_f = 14 \).

The net markdown can be calculated using the formula: \[ \text{Net Markdown} = P_{max} - P_f \] Substituting the values: \[ \text{Net Markdown} = 18 - 14 = 4 \]

Final Answer