A. Judy made a mistake between Steps 1 and 2
To factor

, you have to factor it as

, not

, because that will leave an extra 6x because of 8x - 2x.
512.50/125%=410
100% is the dealers cost
25% is the markup
$410 is the dealer's price before markup
410×25%=102.5. 410+102.5=512.5