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Let's solve this problem step-by-step.

1. **Given Information:**
   - Selling Price (SP) of the item = ₹500
   - Profit Percentage = 25%

2. **Calculate the Cost Price (CP):**
   The profit percentage is given by:
   \[
   \text{Profit} = \frac{\text{SP} - \text{CP}}{\text{CP}} \times 100
   \]
   Rearranging to find CP:
   \[
   \text{CP} = \frac{\text{SP}}{1 + \frac{\text{Profit Percentage}}{100}}
   \]
   Substituting the values:
   \[
   \text{CP} = \frac{500}{1 + \frac{25}{100}} = \frac{500}{1.25} = 400
   \]
   So, the Cost Price (CP) = ₹400.

3. **New Selling Price After Reduction:**
   The price is reduced by 20%, so the new selling price is:
   \[
   \text{New SP} = 500 - (0.20 \times 500) = 500 - 100 = 400
   \]

4. **Calculate the New Profit or Loss Percentage:**
   Since the new SP is ₹400 and the CP is also ₹400:
   - \[
   \text{New Profit/Loss Percentage} = \frac{\text{New SP} - \text{CP}}{\text{CP}} \times 100
   \]
   Substituting the values:
   \[
   \text{New Profit/Loss Percentage} = \frac{400 - 400}{400} \times 100 = 0\%
   \]

**Conclusion:** There is no profit or loss after the price reduction; the new percentage profit or loss is **0%**.

Would you like a breakdown of any part of this solution or have any other questions?

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Here are some related questions:
1. How would the percentage change if the discount was 30% instead of 20%?
2. What would happen to the profit or loss if the original profit percentage was 30%?
3. How can we calculate break-even points in terms of sales and cost price?
4. If the cost price had been ₹450, what would the new profit or loss percentage be after a 20% discount?
5. How is profit margin different from markup, and how are they calculated?

**Tip:** Always verify the original cost price to ensure the accuracy of profit or loss calculations when discounts or markups are applied.

A store sells an item for ₹500, making a profit of 25%. Later, the store reduces the price of the item by 20% to clear out old inventory. What is the new percentage profit or loss for the store?

Learn how to calculate the new profit or loss percentage after a price reduction. This problem involves finding the cost price from a given profit percentage and determining the new selling price after a 20% discount. Suitable for students in Grades 7-9.

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