A merchant sells an item for $180, making a profit of 20% of the cost. What was the original cost of the item?

✓ Correct Answer: Option B

Let C be the cost. Selling price = Cost + Profit. Profit = 0.20C. So, $180 = C + 0.20C = 1.20C. Solving for C: C = $180 / 1.20 = $150.