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Number - Percentages, profit and loss, simple and compound interest

Grade 9IB

Review the key concepts, formulae, and examples before starting your quiz.

🔑Concepts

Percentages represent parts of a whole as a fraction of 100100. Visually, this can be understood using a 'hundred square'—a 10×1010 \times 10 grid where each small square equals 1%1\%. To convert any fraction to a percentage, you multiply the fraction by 100100. For example, 34\frac{3}{4} of a shape shaded is equivalent to 75%75\%.

Percentage change describes how much a value has increased or decreased relative to its original amount. This is often visualized using a bar model where the original value is a bar representing 100%100\%. An increase adds a smaller bar to the end, while a decrease shades out or removes a portion of the original bar. The new value is found by multiplying the original by a multiplier like (1+percentage100)(1 + \frac{\text{percentage}}{100}) for growth.

Profit and Loss are financial measures based on the Cost Price (CPCP) and Selling Price (SPSP). On a horizontal number line where the CPCP is the starting point, a movement to the right (where SP>CPSP > CP) represents a profit, while a movement to the left (where SP<CPSP < CP) represents a loss. Profit and loss are usually expressed as a percentage of the original Cost Price.

Simple Interest is interest calculated only on the initial principal amount (PP) for the entire duration. This results in the interest amount being the same every year. When plotted on a coordinate plane with 'Time' on the xx-axis and 'Total Amount' on the yy-axis, simple interest creates a straight, diagonal line (linear growth) starting from the principal value.

Compound Interest is interest calculated on the initial principal and also on the accumulated interest of previous periods. Visually, this creates a 'snowball effect' represented by an exponential curve on a graph. Unlike the straight line of simple interest, the compound interest curve gets steeper over time as the 'interest on interest' adds up.

Reverse Percentages involve finding the original value (100%100\%) after a percentage change has been applied. This can be visualized as a flowchart: Original Value \rightarrow [Multiply by Change Factor] \rightarrow New Value. To find the original, you work backward: New Value \rightarrow [Divide by Change Factor] \rightarrow Original Value. It is a common mistake to simply apply the percentage to the new value; you must always divide by the multiplier.

📐Formulae

Percentage=ValueTotal Amount×100\text{Percentage} = \frac{\text{Value}}{\text{Total Amount}} \times 100

Percentage Change=New ValueOriginal ValueOriginal Value×100\text{Percentage Change} = \frac{\text{New Value} - \text{Original Value}}{\text{Original Value}} \times 100

Profit or Loss Percentage=Profit or LossCost Price×100\text{Profit or Loss Percentage} = \frac{\text{Profit or Loss}}{\text{Cost Price}} \times 100

I=P×R×T100I = \frac{P \times R \times T}{100}

A=P+IA = P + I

A=P(1+r100)nA = P \left(1 + \frac{r}{100}\right)^n

Original Value=New ValueMultiplier\text{Original Value} = \frac{\text{New Value}}{\text{Multiplier}}

💡Examples

Problem 1:

A retailer buys a smartphone for 400andsellsitfor400 and sells it for 520. Calculate the percentage profit.

Solution:

  1. Find the actual profit: \$520 - \400 = $120$.
  2. Use the percentage profit formula: ProfitCost Price×100\frac{\text{Profit}}{\text{Cost Price}} \times 100.
  3. Substitute the values: 120400×100\frac{120}{400} \times 100.
  4. Simplify the fraction: 0.3×100=30%0.3 \times 100 = 30\%.

Explanation:

To find percentage profit, we first determine the absolute gain in currency and then compare that gain to the original cost (the investment), not the selling price.

Problem 2:

Calculate the total amount in a bank account after 3 years if 5000isinvestedatacompoundinterestrateof5000 is invested at a compound interest rate of 4%$ per annum.

Solution:

  1. Identify the variables: P=5000P = 5000, r=4r = 4, n=3n = 3.
  2. Use the compound interest formula: A=P(1+r100)nA = P(1 + \frac{r}{100})^n.
  3. Substitute the values: A=5000(1+4100)3A = 5000(1 + \frac{4}{100})^3.
  4. Simplify the multiplier: A=5000(1.04)3A = 5000(1.04)^3.
  5. Calculate the power: 1.043=1.1248641.04^3 = 1.124864.
  6. Multiply by the principal: 5000×1.124864=5624.325000 \times 1.124864 = 5624.32.
  7. The total amount is $5624.32\$5624.32.

Explanation:

Using the compound interest formula allows us to find the total final amount (AA) directly. The multiplier 1.041.04 represents the 100%100\% original plus 4%4\% interest added each year.