1988 AJHSME Problem 22

Tom's Hat Shoppe increased all original prices by 25\%. Now the shoppe is having a sale where all prices are 20\% off these increased prices. Which statement best describes the sale price of an item?

\text{(A)}\ \text{The sale price is }5\% \text{ higher than the original price.}

\text{(B)}\ \text{The sale price is higher than the original price, but by less than }5\% .

\text{(C)}\ \text{The sale price is higher than the original price, but by more than }5\% .

\text{(D)}\ \text{The sale price is lower than the original price.}

\text{(E)}\ \text{The sale price is the same as the original price.}

Full credit goes to MAA for authoring these problems. These problems were taken on the AOPS website.