The price of a watch was increased by 20% to £162.
What was the price before the increase?

The original price is 135
Step-by-step explanation:
Write equation. Let o be original price, r be rate of increase, P be the increased price. o+ro=P
Substitute values. Original price (o) is unknown, so that will stay as it is; we know that the increased price (P) is 162; we know that the rate of increase (r) is 20%, which in decimal form is 0.20 o+0.20o=162
Add like terms. o is the same as 1o. So 1+0.20 is 1.20. 1.20o=162
Isolate the variable (o). To isolate o, you need to divide both sides by 1.20. 1.20 divided by 1.20 is the same as 1. 162 divided by 1.20 is 135. o=135
Check your work. Plug in the values into the equation and check if it is correct: o+ro=P becomes (135)+(.20)(135)=162. That is simplified into 135+27=162, which is further simplified into 162=162
It’s correct, the answer is 135