Cost to dealer from wholesaler = 29.15( 1 + P)
Cost to retailer from dealer = 29.15 ( 1 + P)( 1 + P)
Final cost [price] to customer from retailer = 29.15 (1 + P)(1 + P) ( 1 + P) =
29.15 (1 + P)^3
So we have
29.15 ( 1 + P)^3 = 80 divide both sides by 29.15
( 1 + P)^3 = 80 / 29.15 take the cube root of both sides
1 + P = (80 / 29.15)^(1/3) subtract 1 from both sides
P = (80 / 29.15)^(1/3) - 1 ≈ .40 ≈ a 40% markup in each case......i.e., at each stage, the price to the next person in the chain increases by 40% or, by a factor of 1.4
The total markup = [ 80 / 29.15] - 1 ≈ 2.74 - 1 ≈ 1.74 ≈ 174%
