Mathematics ofFinance

Percent
The word, percenf comes from the Lattn per centum, meaning "per hundred." A percent

-l- - x%o.
! =i.5N, on6 100
-100

i5 simlrly a ratio of some number to 100. So,

Procedure to Change a Fraction to a Percent

l. DMde the numerator by the denominator.
2. Multiply the quotient by 100 (which has the effect of moving the decimal point two
places to the dght).
3. Add a percent sign.
Note that steps 2 and 3 together are the equivalent of multiplying by 100%. Since 100%
= 100/100: 1, we are not changing the valrie of the number, we are simply changhg the
number to a percent.

Example

Ch"r'gg

Converting a Fruction to a Percent

1Z1s

-20 s ta.cet1.
Solution Follow the steps in the procedure above.
l.

i7-20:0.85

2.

0.85 x

100:85

3.85o/o

{=35%
Thus.'20
Procedure to Change a Decimal Number to a Percent
I . Multiply the decimal number by 100.
2. Add a percent sign.
This procedure is equivalent to moving the decimal point two places to tlre right and
adding a percent sign.
Example

Converting a Decimtl Nuntber to a Percent

Change 0.235 to percnt.

Solution:

0.235 = (0.235 x 100)Yo=23.5%

Procedure to Change a Percent to a Decimal Nunber

1. Divide the number by 100.
2. Remove the percent sign.

Mathematics of Finarce

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This procedure is equivalent to moving the decimal point two places to the left and
removing the percent sign. Another way to remember this is: percent means per hundred
(or to divide by 100).

Example

Converting a Percent lo a Decimal Number

a) Change 35% to a decimal number.

b) Change YzVo to a decimal number.

Solution

a)' 35o/o=:L=0.35. n Thus. 35%:0.35.

100

I
05
b)'2:% =0.5%=*=0.005.
100

Thus,

;%=0.005.
2

Example
How Old is OLd?
A Yahoo! Question of the Week asked, "At what age do you consider someone old?'l
Out ofthe 3496 people that responded 1017 said age 80 is old. What percent of
respondents feel that age 80 is old?

Solution

To find the percent that feel age 80 is old, divide the number ofthose who
responded that age 80 is old by the total number of respondents. Then move the decimal
poinl two places to the right and add a percent sign:
Percent who feit age 80

i, old =

1017

3496

0.2909 = 29.09%

Thus about 29.1% (to tle nearest tenth ofa percent) felt that age 80 is old.

>f

Percent Change
The percent increase or decrease, or percent change, over a period of time is found by the
foilowing formula:

If tle latest amount is greater than the previous em6u14 fls qnswer will be positive and
will indicate a percent increase. Ifthe latest amount is smaller than the previous amount,
the answer will be negative and will indicate a percent decrease.
Example 5 Most Improved Baseball Record
In 1999, the Major League baseball team with the most improved record was the Oakland
Athletics. In 1998, the Athletics won 74 games. In 1999, the Athtetics won 82 games.
Find the percent increase in number of games won from 1998 to 1999. (Source: IJSA
Today.)

Solution

The previous period is 1998, and the latest period is 1999.

Mathemlrtics ol' I inalce

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l3
" -74
"x100=-x100

*7

74

change:

Percent

74

r: 0.1756x100

'c77.56%
Therefore, there was about a 17.60/o increase.

Example

Labor Union Membership

In 1990 thee were approximately 10,247,000labor union membem in the United States.
By 1998 this number had dropped to 9,306,000. Find the percent change in labor union
membership from1990 to 1998.

Solution

The previous period is 1990, and the latest period

is 1998.

Percent change
_ 9,3060m-r0,242000 xt00

10,247,m

-also;161;n.247m
:v-O.0918x100

x4.2
Thus, union membership decreased by about 9.2Vo over this period.

A formula similar to the above is used to calculate percent markup

A positive answer indicates

or markdown on cost.
markup and a negative answer indicates a markdown.

percent marku o oo
'

price

Dealer' s cost

"o"r:selling Dealer'scosl

,roo

Example
Determining Percent Markup
Holdren Hardware stores pay $48.76 for glass fueplace screens. They regularly sell them
for $79.88. At a sale they sell them for $69.99. Find the following.
a) The percent markup on the regular price
b) The percent markup on the sale price
c) The percent decrease of the sale price from the regular price
Solution
a) We determine the percent markup on the regular price as follows.
Percent markup =

s79.88

$48.76

$48.76
rc 0.6382x100

rl00

-l'L'

63.8%o

Thus, the percent rnarkup was about 63.8%.

b) We determine the percent markup on the sale price as follows.

Mathenratics of finance

l)ago

6q,qq

-i

Percent markup

- $48.76 x 100

$69.99

$48.76
= 0.4353x100

43.5%o

Thus, the percent markup was about 43.5Yo.

c) Based on the regular price, we determine the percent decrease of the sale price

Percent decrease

s69.99

$79.88

x 100

s79.88

* -0.1238x100
x -l2.4Yo

The sale price is abolt 12.4%o lower than the regular price.

In daily life we may need to know how to solve any one of the following three types
problems involving percent:
l.Whatis a 15Yo np on a restaurant bill of$24.66? The problem can be stated as
15% of 524.66 is what number?
2.

IfNancy Jobnson made

a sale

of$500 and received

of

commission of$25, what percent

of the sale is the commission? The problem can be stated as

What percent of$500 is $25?

If the price of a jacket was reduced'by 25% or $12.50, *rhat was the original price of
the jacket? The problem can be stated as
3.

25% of what number is 12.50

lucncrsrs
Rormd answers to tle nearest tenth of a percenl
1. Toothpaste Sales ln 1997, Proctor & Gamble sold about $370 million worth ofCrest
toothpaste. The total sales for all types oftoothpaste in 7997 werc $1.5 billion. What
percent of all toothpaste sales did Crest account for in 1997?

Care

In 1999, 18.6% of all preschool age children with working

2. Preschool Child
mothers were cared for by their fathers while their motlers worked. If the estimated
number of preschool age children with working mothers was 10,398,000' how many
children were cared fo{y their fathers v/hile their mothers worked?
The population of the United States rose from
3. U.S. Population Increase
1990
to
approximately 270.3 million in 1998.
approximately 248.7 million in
a) Find the percent increase in population from 1 990 to 1998.
b) What will the population in th e yer 2006 if it increases at the same percent as it did
from 1990 to 1998?

\'lall: cn ia rics of liinlncc

Pasc 4

4. Decreasing Sales Volume

In 1996 Montgomery Ward had a sales volume of
$6.6 billion. In 1997 the sales volume was $5.7 billion. Find the percent decrease fiom

1996to 1997.
5. Tax and Tip
According to the Original Tipping Page (www.tipnins.org\, itis
proper to tip waiters and waihesses 1520Yo of the total restaurant bill-including the tm.
Mary and Keith's dinner costs $43.50 before tax, and the tax rate is 6%.
a) What is the tax on Mary and Keith's dirurer?
b) What is the total bill, including tax, before the tip?
c) If Mary and Keith decide to tip 1 5% of dre total bill, how much is the tip?
d) What is the total cost of the dinner including the tip?

Group Activity (Journal Iterr)

6. Comparing Mmlcdowns
a) a coat is marked down 10%, and the customer is given a second discount
this the same as a single discount of 25%o? Explain.

of

15%o.

Is

b) The regular price of a chair is $ I 89.99. Determine the sale price ofthe chair ifthe
regular price is reduced by 10% and this price is then reduced another 15olo.
c) Determine the sale price of the chair ifthe regular price of $ 189.99 is reduced by 25%.
d) Examine the answers obtained in parts (b) and (c). Does your answer to part (a)
appear to be correct? Explain.

7. Selling

Ties

The Tie Shoppe paid $5901.79 for a shipment of500 ties and
wants to make a profit of 40% of the cost of the whole shipment The store is having two
special sales. At the first sale it plans on selling 100 ties for $9.00 eacb, and at the second
special sale it plans on sellingl50 ties for $12.50 each- What should be the selli:rg price
of the other 250 ties for the Tie Shoppe to make a 40o/o profit on the whole sbipment?

Simple Interest
Simple fnterest Formula
Interest = principal x rate x time

i:prt

In this formula, the principal, p, is the amormt of money lent, the rate, r, is the rate of
interest expressed as a percent, and the time, l, is the number of days, months, or years for
which the money will be lent Time is expressed in the same period as the rate. For
example, if the rate is 2% per month, the time must be expressed in months. Typically,
rate means the annual rate unless otherwise stated. Principal and interest are expressed in
dollars in the United States. $imple interest is called ordinary interest. For computing
ordinary interesg each month has 30 days and a year has
6e6[s or 360 days. On the
due date of a simple interest note the borrower must repay the principal plus the interesL

ll

ftample

Calculating Interest and Payback Amount

Iy'atlt,3matics of Finance

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