After a price reduction of 20%, the sale price of an item is $16. a student says, "so, the original price must have been 120% of the sale price." is this statement correct? justify your answer.

For this case we can make the following rule of three:
 80% > 16 $
 100% > x
 Clearing the value of x we have:
 x = (100/80) * (16)
 x = 20 $
 We will compare this result with 120% of the sale price.
 We have then:
 (1.20) * (16) = 19.2 $
 
 The statement is not correct. The original price is:
 x = 20 $