QUANTITATIVE

METHOD
Lecture 9:
Percentages
 Scope and Coverage
 This topic will cover:
 Increasing and decreasing by percentages
 Percentage change
 Simple and compound interest
 Reverse percentages
 Learning Outcomes
 By the end of this topic, students will be able
to:
 Increase and decrease given quantities by a
percentage
 Find percentage change
 Carry out calculations involving simple interest
 Carry out calculations involving compound interest
 Find reverse percentages
What You Should Already Know:
 How to find a percentage of a quantity
 How to write one number as a percentage of another
 Equivalent fractions, decimals and percentages
 Mental Warm-Up
1. Find:
a) 25% of £36 b) 10% of £16 c) 30% of £200
d) 5% of £150 e) 75% of £500 f) 2% of £12
2. 60 children visit a show. 36 are boys. What
percentage are girls?
3. A student scores 18 out of 20 in a test. What
percentage is this?
4. Write the equivalent fractions and decimals to these
percentages.
a) 50% b) 75% c) 20% d) 3%
 Percentage Increase
 A bus company increases its fares by 25%. Calculate the
new fare if the old fare was £2.40
 Method 1. Find 25% and add it on
25% = £0.70 New fare = £2.40 + £0.70 = £3.10
Method 2. Use a multiplier.
The new amount is the old amount (100%) plus 25%. 125%
= 1.25. So if you multiply by 1.25 you will get the new
amount. £2.40 x 1.25 = £3.10
Examples:
a) Increase £1.60 by 5% b) Increase £8 by 23%
 Percentage Decrease
 A shop reduces the cost of a skirt by 10%. The original
price was £12. What is the sale price?
 Method 1. Find 10% and subtract it
10% of £12 = £1.20 Sale price = £12 - £1.20 = £10.80
Method 2. Use a multiplier.
If 10% of the price is taken off, then that leaves 90% of the
original price. 90% = 0.9 so we can use 0.9 as a multiplier.
£12 x 0.9 = £10.80
Examples:
a) Decrease £30 by 15%. b) Decrease £54 by 22%
 Percentage Change
 When a value increases or decreases, the change is often given
as a percentage of the original amount
To calculate percentage change, use the formula:
Percentage change = Change (increase or decrease)
Original amount
x 100%
Example:
The number of tickets on sale for a concert increases from
5000 to 6000. Calculate the percentage increase.
 Overall Percentage Change
 The population of a small town increases by 10% one
year and by a further 5% the year after. What was
the overall percentage change?
 First year increase = 10%, so multiplier = 1.1
 If initial population is N, then at the end of the first
year, the population = 1.1N.
 Population at the end of the second year = 1.05 x 1.1N
 So overall percentage change = 1.05 x 1.1 = 1.155
 Percentage change = 15.5%
 Simple Interest
 Interest is the cost of borrowing or lending money
 Interest is earned when money is invested
 Interest is charged when a loan is taken out
 For this account, the interest Invest £1000
Interest paid annually at a
for one year is 5% of £1000 = £50 fixed rate of 5% of the initial
 In three years the interest = investment. 3
x £50 = £150
 This account pays simple interest. The amount paid
is the same each year
 Simple Interest Formula
 Simple interest can be calculated using the formula:
I= where I is the interest, P is the amount
PRT
invested, R is the rate of interest and T is the time
100
invested.
Example: Chico borrows £800 for two years. Simple
interest is charged at 10% per year. How much does
Chico pay back altogether?
 Compound Interest
 Most banks and building societies pay compound interest
 The interest rate on Sally’s savings account is 5% per year.
If she puts £200 in, how much will she have after 4 years?
Answer: Each year the interest is calculated based on the
amount in the bank at the end of that year. So:
Using a multiplier:
200 x 1.05 = 210
210 x 1.05 = 220.5
220.5 x 1.05 = 231.525
231.525 x 1.05 = 243.10125
There must be a quicker way?
 Compound Interest Formula
 Multiplying by 1.05 four times is the same as multiplying
by 1.054
Therefore, a quicker way is: 200 x 1.054.= 243.10125
Sally will have £243.10 after 4 years.
Compound interest can be calculated using the formula:
A = P(1 + )T
Where A is the final value of the investment, P is the amount
R
invested, R is
100the rate of compound interest and T is the time
invested.
 Reverse Percentages
 Reverse percentages involve finding an original
value when the value after a percentage increase or
decrease is known
 Examples include:
 Finding the original cost of an item before it was
reduced in a sale.
 Finding the cost of an item without the VAT.
 Examples
 The price of a kettle is £9.40. The price includes 17.5%
VAT. What is the price of the kettle without the VAT?
 Original price without VAT = 100%
 Price including VAT = 117.5%
 Original price x 1.175 = price including VAT
 Original price = £9.40/1.175
= £8
 A coat is reduced by 10% in a sale. Its sale price is £45.
What was its original price?
 Five to Try:
1. a) Increase £180 by 5% b) Decrease £36 by 15%
2. A chef makes a meal for £20. The price on the menu is £23. What is his
percentage profit?
3. Matt buys a watch for £80. He sells it for £50. What is his percentage loss?
4. The average number of vehicles in a car park has increased by 20% since
last year. The average is now 240. What was the average last year?
5. Calculate the compound interest on £2000 at 3% interest per year after 4
years.
 Recap
 I can increase and decrease values by a given
percentage
 I can find a percentage change
 I can calculate simple and compound interest
 I can calculate reverse percentages
LECTURE 9 – PERCENTAGES
Any Questions?