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CALCULATING PERCENTAGES
C o n v e rting Decimals and Fractions
Starting Point
Go to www.wiley.com/college/slavin to assess your knowledge of calculating percentages. Determine where you need to concentrate your effort.

What You’ll Learn in This Chapter
▲ ▲ ▲ ▲ How to convert decimals and fractions to percentages The definition of percentage, rate, and base How to calculate percentage increase and percentage decrease How to find a percentage distribution

After Studying This Chapter, You’ll Be Able To
▲ ▲ ▲ ▲ Apply the methods for converting decimals and fractions to percentages Examine the relationship between percentage, rate, and base Calculate percentage increase and percentage decrease Compare the uses of percentage distribution

Goals and Outcomes
▲ Master the terminology, understand the procedures/perspectives, and recognize the tools used in calculating percentages ▲ Understand the business uses of percentage calculations ▲ Use tools and technique to analyze percentage changes and distributions

So. 25. How would you convert the decimal 5? To figure this one out.20 120%. When you learn how to convert percentages into decimals or fractions and vice versa. Percentages are really decimals and fractions (see Chapters 1 and 2) dressed up to look a little different.1 CONVERTING DECIMALS TO PERCENTAGES 31 INTRODUCTION Much of the business world requires a thorough understanding of percentages. 0.03 0.2 and 1.) and add two zeros (i.1. . You would follow the same procedure for 82 or 306.2137T_c03_030-046 29/9/06 22:27 Page 31 3.29 0. you simply add a 0 to the end of the number so that you can move the decimal point two places: 1. you move the decimal point two places to the right and add a percent sign.835 1. to get 25.e.00 8200% and 306.5%. Then you move the decimal two places. 3.2? In this case.. (Keep in mind that with a whole number such as 25. Any percentage can be expressed as a fraction or as a decimal. For example. you move the decimal place two places to the right and add a percent sign (%).32 0. 5. because 1.20 are the same number. you place the implied decimal point at the end of the number (i. you don’t need the decimal point at the end [i. because the new value would be 300. and any decimal or fraction can be expressed as a percentage. and you get 500%. 5..41 How do you convert the decimal 1. including those tricky “30% off” and “50% increase” problems.e. to convert the decimal 0. You can add a zero if doing so doesn’t change the value of the number.e.] because a decimal point at the end of any whole number is implied. But you can add a zero to 1.2. you can’t add a zero to 30.00).1. You simply add the implied decimal point and any zeros. 5.255.) Try converting these decimals to percentages: 1.. 3. as needed. 2.00 30600%. and move the decimal two places: 82. solving percentage problems is a snap.1 Writing Decimals and Fractions as Percentages The first step in solving any percentage problem is to understand the connection between percentages and decimals (or fractions). 4.1 Converting Decimals to Percentages To convert a decimal to a percentage. 3.

you must first convert the fraction to a decimal (i.. you multiply both the numerator and the denominator by 5. 4. 6..1. 1 For example. How much is the decimal? It’s 0. so you multiply both the numerator and denominator by 2. divide the numerator by the denominator) and then use the procedure described in Section 3.e. as 2 20 5 5 10 100 10% . How much is 100 as a percentage? It’s 1%. 5. 10. So. you simply reverse the process: Move the decimal point two places to the left. by multiplying).2137T_c03_030-046 10/4/06 9:56 PM Page 32 32 CALCULATING PERCENTAGES 3.01.125% 82% 500% 3. For example. See Chapter 2 for information on converting fractions to decimals. Let’s take a closer look at the relationship among decimals. 8. you can easily find the percentage.01 1% In fact.2 Converting Percentages to Decimals To change a percentage to a decimal. suppose you are given 50 and asked to find the percentage.2% 82. 3.g. and 1 1 percentages. For this reason.1. We’ll begin with the fraction 100. 1 100 0. 25% 33% 45.0% 0.3 Converting Fractions to Percentages To convert a fraction to a percentage. as follows: 1 50 2 2 2 100 2% If you have follows: 2 20 . 78% 78.25% 600% 42% 326. 2. You want to get 100 in the denominator.9% 7. Try converting the following percentages to their decimal equivalents: 1. 9.78. the percentage will be the numerator. 7. any time you have a fraction with 100 in the denominator.1.1. fractions. if you can get 100 in the denominator (e.

8 5 . such as 2. 80 4. 10. 41 5 9 8. 10 9.” “20% more for your money.20. 4.50 2 1 121% .75. 40. you need to know its decimal equivalent. It is useful to memorize the common percentages and their decimal and fractional equivalents.25 4 1 331% . decimals.” When fractions sound better. those terms are used instead: “One-quarter of our staff.2 5 4 80% .67 3 3 1 20% . 25 7 2. you can fiddle with—and even question— the numbers you see in corporate reports and in company advertisements. the use of percentages.75 4 2 662% . But in order to put a fraction into an equation and make quick calculations. 50 2 6. or 50.1.” “200% reduction in defects. Hint: This works only if the denominator is a factor of 100.3333 3 3 1 50% . 31 2 4 5.0. 30 7. 5.2137T_c03_030-046 29/9/06 22:27 Page 33 3. The following chart lists some of the most common: Percentage Decimal Fraction 1 25% . If you can easily calculate that 300% is 3.2 CONVERTING FRACTIONS TO PERCENTAGES 33 This is a simple shortcut that prevents you from having to divide the numerator by the denominator.” “Three-quarters of those surveyed. 16 32 FOR EXAMPLE Why Do We Need to Know Percentages? In the business world. Business leaders and others—and even advertisements—talk in terms of percentages when those numbers sound impressive: “300% increase in profits.125 2 8 3 75% .” and “50% off sale.” and so on. 20% is 0. and fractions is intertwined. 45 90 10. 20. Try converting the following fractions to percentages: 1 1. 25 40 3. as you are instructed to do in Chapter 2. and three-quarters is 0.

” and is always means “equals. 3. you can calculate the percentage.08 B 65 65 R ? 3 Therefore. which is the number of hundredths parts taken. . in the equation 9 ▲ 10% is the rate. base. • Review how to convert fractions to decimals. is commonly followed by a percent sign or a decimal. and rate are three components involved in calculating percentages. and the rate is 8%. Base. The rate. it is a fraction representing a relationship between the percentage and the base. ▲ 90 is the base. The percentage is the part of the base determined by the rate. • Draw basic conclusions about the relationship between decimals and percentages. ▲ 9 is the percentage. you can set up the following equation: P 8% 0.2. To find the percentage. Confused? It’s really quite simple if you look at the following equation: P B R So. 8% of 65 is 3.2137T_c03_030-046 29/9/06 22:27 Page 34 34 CALCULATING PERCENTAGES SELF-CHECK • Describe how to convert decimals to percentages and vice versa. the starting amount.2 Finding the Percentage.1 Finding the Percentage When the Base and Rate Are Known As mentioned in the preceding section. what number is 8% of 65? In this case. for example. 90 10% 3. and Rate Percentage (amount). by using this formula: P B R For example. you say “8% of 65 is what?” (Note that of always means “multiply. if you know the base and rate. The base is the number on which the rate operates. the base is 65.”) In this case.

you can find the rate. 3. the base is 72. 5. 8. 5.25 3 P/B 4 ?%/72 ?% 72 ?% 25% Chapter 4 discusses this process in more depth. 6. 7. 6.95 11% of 10 1 2 % of 100 400% of 50 2% of 90 1% of 9 20% of 16. each set of numbers on either side of the equals sign) by 72. 2. you divide each side of the equation (that is. and the percentage is 18. 18 is what percentage of 72? Here. 9. 8. 10. 4. You can make this into a simple equation: 18 ?% 72 To find the answer. 25% of 100 10% of 300 5% of 25 6% of 9. 2. as follows: R 18 18 72 0.2. 3.000? 45 is what percentage of 180? 200 is what percentage of 25? 27 is what percentage of 200? \$4 is what percentage of \$100? 9 is what percentage of 10? . by using this formula: R 3P/B 4 For example. 60 is what percentage of 600? 15 is what percentage of 150? 700 is what percentage of 70. 4.2 FINDING THE RATE WHEN THE BASE AND PERCENTAGE ARE KNOWN 35 Try finding the percentages for the following: 1.2.95 3. 7. Try finding the following rates: 1.2 Finding the Rate When the Base and Percentage Are Known If you know the base and percentage.2137T_c03_030-046 29/9/06 22:28 Page 35 3.

and the percentage is 10.25 40 0. Rate.200? 10. Suppose you’re planning to buy a house that costs \$130. and Percentage in the Real World Base.25 ? ? ? Try finding the following bases: 1.000.000 down payment. 10 15 25 40 60 is is is is is 40% of what? 30% of what? 4% of what? 10% of what? 300% of what? FOR EXAMPLE Base.25 ? To find the answer. and percentage are used extensively in business and personal finance. 821 is what percentage of 141? 2 3. you make it into a simple equation: 10 25% ? Then you convert the rate to a decimal. you divide each side of the equation by 0. you can find the base by again using this formula: P R B For example.000. 1. 10 is 25% of what number? In this case. .000).25. In words. and plug that in to the equation: 10 0.000 is what?” This equates to the simple equation 20% \$130. In this case.3 Finding the Base When the Percentage and Rate Are Known If you know the percentage and rate. So you need to come up with a \$26. You need to find the percentage to know how much money you need to put down.2137T_c03_030-046 29/9/06 22:28 Page 36 36 CALCULATING PERCENTAGES 9.2.25 0. 3.25. 4.20 \$130. 5. like this: 10 10 0. To solve this. rate.000 ? or 0.000 is what percentage of 1. you say this as “20% of \$130.25 0. 2.000 \$26. you know the rate (20%) and the base (\$130. the rate is 25%. 0. The mortgage company wants you to put down 20%.

After eating less and exercising five days per week for seven months.3 Percentage Increases and Decreases Suppose you were earning \$500 per week and got a \$20 raise. Here’s an example of a percentage decrease problem: On New Year’s Eve. 3.100.3 PERCENTAGE INCREASES AND DECREASES 37 SELF-CHECK • Define base. By what percentage did your weight decrease? Here’s how you figure it out: Percentage change Percentage change 30 140 Change Original number 3 14 0.00 . • Calculate one quantity when you know the other two. By what percentage did your salary go up? You use the following equation to find out: Percentage change Change Original number Your salary is the original number. 000. your weight dropped from 140 pounds to 110 pounds. rate. say your corporation is giving you a 5% bonus for your excellent work on the Alpha Project.05 \$2. you made a resolution to lose 30 pounds by the end of July. the percentage change is an increase of 4%.2143 21. and your raise is the change: Percentage change \$20 \$500 2 50 4 100 4% Therefore. how much is your bonus? Here’s how you figure it out: ? 42. • Describe how these three terms interrelate.000 . • Set up simple equations.2137T_c03_030-046 29/9/06 22:28 Page 37 3. and percentage. If the bonus is based on your current salary of \$42. you use the following formula: Change Original number Percentage change For example.43% If you know the original number and the percentage change and want to calculate the amount of the change.

You expect an increase in sales this summer at your water and ice stand.000 New number (\$720. how many can be expected per week this year? For Example Percentage Change Applications Not sure where you’ll use percentage change in the real world? In business. Suppose you manage human resources for a small company.000 \$936. you subtract the change from the original number.2137T_c03_030-046 29/9/06 22:28 Page 38 38 CALCULATING PERCENTAGES If you want to know not just the change but also the new number.000. and you would like to leave the service staff a 20% tip.20) 40 New number \$216. how much do you have to spend this year? Here’s how you figure it out: New number (Original number Percentage change) Original number New number (\$720. If the company installed 30 new cable customers per week in the prior year.000 . you’ve been allocated an additional 30% in your annual budget to hire new employees.00. How much cash must you leave? Here’s how you figure it out: New number 1Original number New number New number New number Percentage change2 140 \$8 140 20%2 0. as follows: New number Original number 1Original number Percentage change2 Try figuring out the following percentage changes: 1.000 30%) \$720. percentage change comes up all the time. What is the rate of increase? 2.000 \$720.000 0. If last year’s budget was \$720. Because the company’s profits grew 30% last year. you have to add in the original number: New number Change Original number Here’s an example: Your restaurant bill is \$40. your local cable provider forecasts new installations to be at a 20% rate of increase over the prior year.202 \$40 40 40 \$48 Original number If you’re calculating a percentage change that results in a decrease from the original number. As a result of spending \$6 million in additional advertising this year. from 150 cups per day to 175.

▲ Accountants are also 1.2% 9. • Discuss the amount you have left when you experience a 100% decrease.5% 27. and the rest are support staff. In a nutshell. 3. Say that sales increase by 210 units. sales team A sold 250 MP-3 players. What percentage of the session is men and what percentage is women? The answers are pretty obvious: 50% and 50%. and sales team D sold 50. 4 ▲ Support staff must be the remaining 50%. accounting. the problems get a little more complex than this. Here’s a more challenging example: If.1% . sales team B sold 150. percentage decrease. sales team C sold 100.2137T_c03_030-046 29/9/06 22:28 Page 39 3. one-quarter is from the accounting department. What is the rate increase if original sales were 1.415 units? 4. and the sales for each team are determined as follows: Sales team A : [250/550] Sales team B : [150/550] Sales team C: [100/550] Sales team D: [50/550] 45.3% 18. What is the team’s percentage distribution of sales. over the course of a week. and support staff? Here’s how you figure it out: 1 ▲ Sales are 4. and percentage change. but the totals always add up to 100%.4 PERCENTAGE DISTRIBUTION 39 3. or 25%. or 25%. Sure. What is the rate of increase? SELF-CHECK • Calculate percentage increase. Your salary increases from \$435 per week to \$497. Suppose one-quarter of the management team is in sales.4 Percentage Distribution A corporate in-service training session is composed of half men and half women. what percentage of the total sales was each team responsible for? A total of 550 MP-3 players (250 150 100 50) were sold. that’s all there is to percentage distribution.

Likewise. purchases. . you add up all four percentages. when completing a balance sheet. (The 0.1 is due to rounding. You analyze income statements by determining the percentage of sales. you compare each individual component of assets and liabilities as a percentage distribution of total assets and total liabilities. You cannot create a pie chart without being able to figure percentage distribution. To check whether you’re correct. if you end up with 100. A manufacturer for the upcoming fiscal year projects sales of power drills of 42. In fact. inventory. The marketing department believes the sales mix will be as following: (a) 40% Construction-grade drills (b) 35% Handyman-grade drills (c) 25% Craft-making–grade drills Figure 3-1 Sales team D 9% Sales team C 18% Sales team A 46% Sales team B 27% Pie Chart.500. expenses. as compared to net sales. and so on.9.1 or 99. that’s close enough to 100%. if you created a pie chart for the sales example in this section.) Try figuring out the following percentage distribution: 1.1%.2137T_c03_030-046 29/9/06 22:28 Page 40 40 CALCULATING PERCENTAGES For Example Percentage Distribution Percentage distribution is a major component of financial statements and business statistics. and you get 100. the chart would look like the one shown in Figure 3-1.

A period located between units and tenths. calculate percentage changes (increases and decreases). • Check that the totals add up to 100%. A number that is followed by a percent sign. find the rate. The part of the base that is determined by the rate. • Consider the uses of percentage distribution in the business world. An expression of a part of a whole amount. base. and find the percentage distribution for given data. . which expresses how the base and percentage are related to each other. or percentage when two of those numbers are known. calculate percentage distribution. The percentage (part) of the total in each class or category. In the business world. SUMMARY The ability to calculate percentages is a key business tool. KEY TERMS Base Decimal point Fraction Percentage Percentage change Percentage distribution Rate The beginning whole amount on which the rate operates.2137T_c03_030-046 29/9/06 22:28 Page 41 KEY TERMS 41 SELF-CHECK • Given raw data. you may need to convert fractions and percentages to decimals and vice versa. The amount by which a percentage (an amount) increases or decreases.

Given 3 2. (d) adding the original number to the change.00. (c) the part of the base determined by the rate. By definition. Summary Questions 1.3 (c) 1 (d) 200. Changing a decimal to a percentage involves moving the decimal point two places to the left and adding a percent sign.32 (b) 17.1%. The percentage distribution always adds up to: (a) the amount of the base. (b) the total number of units.1 (e) 10 2. 4. Measure your learning by comparing pre-test and post-test results. base is: (a) a number followed by a percent sign. give or take 0. (d) 100. (d) all of the above. (b) dividing the original number by the change. (b) the number on which the rate operates. Given the original number and the amount of change. 3. True or False? 2. Convert the following to percentages: (a) 0.2137T_c03_030-046 10/5/06 10:52 PM Page 42 42 CALCULATING PERCENTAGES ASSESS YOUR UNDERSTANDING Go to www. what is the percentage? 10 3.com/college/slavin to evaluate your knowledge of the basics of calculating percentages. What is the percentage change if you go from 150 to 180? .wiley. (c) 100. you find the percentage change by: (a) dividing the change by the original number.3 4 . Review Questions 1. (c) multiplying the change by the original number.