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Percents and Their Applications in Business

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Performance Objectives
Section I: Understanding and Converting Percents
1: Converting percents to decimals and decimals to percents
2: Converting percents to fractions and fractions to percents
Section II: Using the Percentage Formula to Solve Business Problems
3: Solving for the portion
4: Solving for the rate
5: Solving for the base
Section III: Solving Other Business Problems Involving Percents
6: Determining rate of increase or decrease
7: Determining amounts in increase or decrease situations
8: Understanding and solving problems involving percentage points
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Section I: Understanding and Converting Percents

percent
• A way of representing the part of a whole. Percent means “per
hundred” or “parts per hundred.”
percent sign
• The symbol, %, used to represent percents.
• For example, 1 percent would be written 1%.

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Steps for Converting a Percent to a Decimal

STEP 1: Remove the percentage sign.
STEP 2: Divide by 100.
3
Note: If the percent is a fraction such as % or a mixed number such
8
as 4 ¾ %, change the fraction to a decimal; then follow Steps 1 and
2 above.
3 3
% = .375% = .00375 4 % = 4.75% = .0475
8 4
2
Note: If the percent is a fraction, such as %, which converts to
3
a repeating decimal, .66666, round the decimal
to hundredths, .67; then follow Steps 1 and 2 2
% = .67% = .0067
above. 3
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Converting Percents to Decimals Example

Convert the following percents to decimals.
37
37% = = 0.37
100

12.5
12.5% = = 0.125
100

1 7.25
7 % = 7.25% = = 0.0725
4 100

0.04
0.04% = = 0.0004
100
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Steps for Converting a Decimal or Whole

Number to a Percent
STEP 1: Multiply by 100.

STEP 2: Write a percent sign after the number.

STEP 3: If there are fractions involved, such as ¾, convert them to

decimals first; then proceed with Steps 1 and 2 above.

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Converting Decimals to Percents Example

Convert the following decimals to percents.
2.9 = 2.9  100 = 290%

1
0.83 = 0.835 = 0.835  100 = 83.5%
2

0.00827 = 0.00827  100 = 0.827%

6.24 = 6.24  100 = 624%

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Steps for Converting Percents to Fractions

STEP 1: Remove the percent sign.
STEP 2: (If the percent is a whole number) Write a fraction with the
percent as the numerator and 100 as the denominator. If
that fraction is improper, change it to a mixed number.
Reduce the fraction to lowest terms.
or
1
STEP 2: (If the percent is a fraction) Multiply the number by
100
and reduce to lowest terms.
or
STEP 2: (If the percent is a decimal) Convert it to a fraction and
1
multiply by . Reduce to lowest terms.
100
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Converting Percents to Fractions Example (1 of 2)

Convert the following percents to fractions and reduce if necessary.

5 1
5% = =
100 20
1 75 1 75 3
37.5% = 37 
1
2 =  = =
100 2 100 200 8
1 1 125 1 125 5
62 % = 62 2 
1
=  = =
2 100 2 100 200 8
8 1 8 1
0.8% =  = =
10 100 1000 125
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Converting Percents to Fractions Example (2 of 2)

Convert the following percents to fractions and reduce if necessary.

230
230% = = 2 100
30
= 2 103
100

450
450% = = 4 100
50
= 4 21
100

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Steps for Converting Fractions to Percents

STEP 1: Change the fraction to a decimal by dividing the numerator
by the denominator.
STEP 2: Multiply by 100. (Move the decimal point two places to the
right. Add zeros as needed.)
STEP 3: Write a percent sign after the number.

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Converting Fractions to Percents Example

Convert the following fractions or mixed numbers to percents.
3
= 0.75 = 0.75  100 = 75%
4

12 2
= 2 = 2.4 = 2.4 100 = 240%
5 5

125 1
= 1 = 1.25 = 1.25 100 = 125%
100 4

78 1
= 3 = 3.25 100 = 325%
24 4

1
4 = 4.2 = 4.2 100 = 420%
5
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Section II: Using the Percentage Formula to

Solve Business Problems
base
• The variable of the percentage formula that represents 100%, or
the whole thing.
portion
• The variable of the percentage formula that represents a part of
the base.
rate
• The variable of the percentage formula that defines how much or
what part the portion is of the base. The rate is the variable with
the percent sign.
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Steps for Solving Percentage Problems (1 of 3)

STEP 1: Identify the two knowns and the unknown.
STEP 2: Choose the formula that solves for the unknown.
STEP 3: Solve the equation by substituting the known values for
the letters in the formula.
Hint: By remembering one basic formula, P = R × B, you can derive
the other two by using your knowledge of solving equations
from Chapter 5. Because multiplication is indicated, we isolate
the unknown by performing the inverse, or opposite,
operation, division.

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Steps for Solving Percentage Problems (2 of 3)

To solve for rate, R, divide both sides of the equation by B:

P RB P
P = R B → = → =R
B B B
To solve for base, B, divide both sides of the equation by R:

P R B P
P = R B → = → =B
R R R
Another method for remembering the percentage formulas is by
using the Magic Triangle.

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Steps for Solving Percentage Problems (3 of 3)

The Magic Triangle

The triangle is divided into three sections representing the portion,

rate, and base. By circling or covering the letter in the triangle that
corresponds to the unknown of the problem, the triangle will
“magically” reveal the correct formula to use.

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Percentage Problem Example (1 of 6)

Maritza Torres owns 37% of the family restaurant.
If the total worth of the business is $160,00, how much is
Maritza’s share?

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Percentage Problem Example (1 of 6)

Maritza Torres owns 37% of the family restaurant.
If the total worth of the business is $160,00, how much is
Maritza’s share?

P = R × B = .37 × 160,000 = 59,200

Maritza's share is worth $59,200.
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Percentage Problem Example (2 of 6)

What is the sales tax in a state where the tax on a purchase of
$464 is $25.52?

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Percentage Problem Example (2 of 6)

What is the sales tax in a state where the tax on a purchase of
$464 is $25.52?

P 25.52
R= = = .055 = 5.5%
B 464
The sales tax is 5.5%.
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Percentage Problem Example (3 of 6)

The Daily Times reports that 28% of its advertising is for
mobile telephone services.
If the mobile telephone advertising amounts to $46,200, what is
the total advertising expenditure of the newspaper?

P 46,220
B= = = 165,071.43
R 0.28
The Daily Times spends $165,071.43 on all advertising.
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Percentage Problem Example (4 of 6)

Geri Carroll, a sales associate for a large company, successfully
makes the sale on 40% of her sales presentations.
If she made 25 presentations last week, how many sales did she
make?

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Percentage Problem Example (4 of 6)

Geri Carroll, a sales associate for a large company, successfully
makes the sale on 40% of her sales presentations.
If she made 25 presentations last week, how many sales did she
make?

P = R  B = .4 × 25 = 10
Geri made 10 sales last week.
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Percentage Problem Example (5 of 6)

A quality control process finds 17.2 defects for every 8,600
units of production.
What percent of the production is defective?

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Percentage Problem Example (5 of 6)

A quality control process finds 17.2 defects for every 8,600
units of production.
What percent of the production is defective?

P 17.2
R= = = .002 = 0.2%
B 8,600
0.2% of the production is defective.
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Percentage Problem Example (6 of 6)

The Torryville Tigers have won 80% of their basketball games.
If they lost 4 games, how many games have been played?

Won = 80%
Lost = 20%, 4 games

P 4
B = = = 20
R .2

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Section III: Solving Other Business Problems

Involving Percents
Steps for Determining the Rate of Increase or Decrease

STEP 1: Identify the original and the new amounts and find the
difference between them.
STEP 2: Using the rate formula R = P ÷ B, substitute the difference
from Step 1 for the portion and the original amount for the
base.
STEP 3: Solve the equation for R. Remember, your answer will be
in decimal form, which must be converted to a percent.

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Rate of Increase or Decrease Example (1 of 2)

5
Allied Plumbing sold 2,390 feet of -inch galvanized pipe in
8
July. If 2,558 feet were sold in August, what is the percent
increase in pipe footage sales?

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Rate of Increase or Decrease Example (1 of 2)

5
Allied Plumbing sold 2,390 feet of -inch galvanized pipe in
8
July. If 2,558 feet were sold in August, what is the percent
increase in pipe footage sales?

P = Increase = 2,558 − 2,390 = 168

B = Original Amount = 2,390

P 168
R= = = .07 = 7%
B 2,390

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Rate of Increase or Decrease Example (2 of 2)

The supermarket price of yellow onions dropped from $0.59
per pound to $0.45 per pound. What is the percent decrease in
the price of onions?

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Rate of Increase or Decrease Example (2 of 2)

The supermarket price of yellow onions dropped from $0.59
per pound to $0.45 per pound. What is the percent decrease in
the price of onions?

P = Decrease = $0.59 − $0.45 = $0.14

B = Original Amount = $0.59
𝑃 0.14
𝑅= = = 0.2373 = 23.73%
𝐵 0.59

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Steps for Determining the New Amount After a

Percent Change
STEP 1: In the formula Portion = Rate × Base, substitute the
original amount, or starting point, for the base.
STEP 2: If the rate change is an increase, add that rate to 100% to
get the rate.
or
STEP 2: If the rate change is a decrease, subtract that rate from
100% to get the rate.
STEP 3: Solve the equation for the portion.

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Determining the New Amount After a Percent

Change Example
Economists predict that next year housing prices will drop by
4%. This year’s price for an average house is $110,000. What
will the average price of a house be next year?

Rate = 100% − 4% = 96%

Base = Original Amount = 110,000

P = R × B = .96 × 110,000 = $105,600

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Steps for Determining the Original Amount

Before a Percent Change
STEP 1: In the formula Base = Portion ÷ Rate, substitute the new
amount for the portion.
STEP 2: If the rate change is an increase, add that rate to 100% to
get the rate.
or
STEP 2: If the rate change is a decrease, subtract that rate from
100% to get the rate.
STEP 3: Solve the equation for the base.

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Determining the Original Amount Before a

Percent Change Example (1 of 2)
City Auto sold 112 cars this month. If this is 40% better than
last month, how many cars were sold last month?

Portion = 112

Rate = 100% + 40% = 140% = 1.4

P 112
B= = = 80 cars
R 1.4

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Determining the Original Amount Before a

Percent Change Example (2 of 2)
The second shift of a factory produced 17,010 units. If this
amount was 5 ½% less than the first shift, how many units
were produced on the first shift?

Portion = 17,010
1 1
Rate = 100% − 5 % = 94 % = .945
2 2

P 17, 010
B= = = 18, 000 units on the first shift
R 0.945
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Problems Involving Percentage Points

percentage points
• A way of expressing a change from an original amount to a new
amount without using a percentage sign.

Change in percentage points

Rate of change =
Original amount of percentage points

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Problems Involving Percentage Points

Example (1 of 2)
After a vigorous promotion campaign, Erie Electronics
increased its market share from 5.4% to 8.1%, a rise of 2.7
percentage points. What percent increase in market share
does this represent?

2.7 percentage point increase 5.4% = 5.4 original percentage points

change in percentage points 2.7

Rate of change = = = 0.50 = 50%
original amount of percentage points 5.4

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Problems Involving Percentage Points

Example (2 of 2)
The unemployment rate in Glen Haven dropped from 8.8% to
6.8% in the past year, a decrease of 2 percentage points. What
percent decrease does this represent?

2 percentage point decrease 8.8% = 8.8original percentage points

change in percentage points 2

Rate of change = = = 0.2273 = 22.73%
original amount of percentage points 8.8

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Chapter Review Problem 1

Convert the following percents to decimals.
89% = 0.89

0.26% = 0.0026

3
9 % = 9.75% = 0.0975
4

23 3
% = 4 % = 4.6% = 0.046
5 5
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Chapter Review Problem 2

An ad read, “This week only, all merchandise 35% off!” If a
television set normally sells for $349.95, what is the amount of
the savings?

Rate = 35%

Base = Original Amount = 349.95

P = R × B = .35 × 349.95 = 122.48

The savings is $122.48.

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Chapter Review Problem 3

If 453 runners out of 620 completed a marathon, what percent
of runners finished the race?

Portion = 453

Base = Original Amount = 620

P 453
R= = = .731= 73.1%
B 620

73.1% of runners finished the race.

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Chapter Review Problem 4

By what percent is a 100-watt light bulb brighter than a 60-watt
light bulb?

Portion = Increase = 100 − 60 = 40

Base = Original Amount = 60

P 40
R= = = .667 = 66.7%
B 60

A 100-watt light bulb is 66.7% brighter than a 60-watt light bulb.

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Chapter Review Problem 5

A pre-election survey shows that the popularity of a
presidential candidate has increased from 26.5 percent to 31.3
percent of the electorate, an increase of 4.8 percentage points.
What percent increase does this represent?

4.8 percentage point increase 26.5% = 26.5original percentage points

change in percentage points 4.8
Rate of change = = = 0.181 = 18.1%
original amount of percentage points 26.5

There is an 18.1% increase.

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