Problem: In a video store, a DVD that sells for $15 is marked "10% off." What is the discount?

What is the sale price of the DVD? Analysis: Stores often sell goods for a discounted price. Typically, a store will discount an item by a percent of the original price. In this problem, an item that originally costs $15 is being discounted by 10%. So "10% off" refers to the rate of discount. To solve this problem, we need a procedure. Procedure: 1. The rate is usually given as a percent. 2. To find the discount, multiply the rate by the original price. 3. To find the sale price, subtract the discount from original price. Now that we have a procedure, we can solve the problem above. Problem: In a video store, a DVD that sells for $15 is marked, "10% off". What is the discount? What is the sale price of the DVD? Solution: The rate is 10%. The discount is: 0.10 x $15.00 = $1.50 The sale price is calculated as follows: $15.00 original price - 1.50 - discount $13.50 sale price Answer: The discount is $1.50 and the sale price is $13.50. Let's take a look at some more examples of calculating discount and sale price. Example 1: In a department store, a $40 dress is marked, "Save 25%." What is the discount? What is the sale price of the dress? Analysis: Solution: The phrase, "Save 25%," refers to the rate. The original price of the dress is $40. The rate is 25%. The discount is: 0.25 x $40.00 = $10.00 The sale price is calculated as follows: $40.00 original price - 10.00 - discount $30.00 sale price The discount is $10.00 and the sale price is $30.00.

Answer:

Example 2: In a grocery store, a $12 case of soda is labeled, "Get a 20% discount." What is the discount? What is the sale price of the case of soda?

Analysis:

The phrase, "Get a 20% discount," refers to the rate.

Solution:

The rate is 20%. The discount is: 0.20 x $12.00 = $2.40 The sale price is calculated as follows: $12.00 original price - 2.40 - discount $ 9.60 sale price The discount is $2.40 and the sale price is $9.60.

Answer:

Example 3: In a candy store, a $5.00 jar of candy is labeled, "50% off." What is the discount? What is the sale price of the jar of candy? Analysis: Solution: The phrase, "50% off," refers to the rate. The rate is 50%. The discount is: 0.50 x $5.00 = $2.50 The sale price is calculated as follows: $5.00 original price - 2.50 - discount $2.50 sale price Answer: The discount is $2.50 and the sale price is $2.50.

In Example 3, note that the discount and the sale price are the same amount! Do you know what fraction is equal to 50%? Could you have done this problem using mental math? The phrase, "50% off," is the same as, "1/2 off". So using mental math, you would get that one-half of $5.00 is $2.50. Let's look at another example that uses a fraction. Example 4:

A pizzeria has a coupon that reads, "Get off a $9.00 cheese pizza." What is the discount? What is the sale price of the cheese pizza? The phrase, " off," refers to the rate. It is expressed as a fraction. The rate is given as the fraction . The discount is: x $9.00 = $3.00 The sale price is calculated as follows: $9.00 original price - 3.00 - discount $6.00 sale price

Analysis: Solution:

Answer:

The discount is $3.00 and the sale price is $6.00.

Once again, you could calculate the discount and sale price using mental math. Let's look at another way of calculating the sale price of an item. Below is a modified version of the problem from the top of this page. Example 5: In a video store, a DVD that sells for $15 is marked, "10% off." What is the sale price of the DVD? Solution: The rate is 10%. Thus, the customer is paying 90% for the DVD. The sale price is: 0.90 x $15.00 = $13.50 Answer: The sale price is $13.50.

Note that we calculated the sale price in the above problem, but we did not calculate the discount. Summary: Stores often sell goods for a discounted price. Typically, a store will discount an item by a percent of the original price. The rate of discount is usually given as a percent, but may also be given as a fraction. The phrases used for discounted items include, " off," "Save 50%," and "Get a 20% discount." Procedure: 1. To calculate the discount, multiply the rate by the original price. 2. To calculate the sale price, subtract the discount from original price.

Interest

Problem:

To buy a computer, Raquel borrowed $3,000 at 9% interest for 4 years. How much money did she have to pay back? When money is borrowed, interest is charged for the use of that money over a certain period of time. The

Analysis:

amount of interest charged depends on the amount of money borrowed, the interest rate and the length of time for which the money is borrowed. Definitions: Principal is the amount of money borrowed. The interest rate is given as a percent. Time is the length of time in years for which the money was borrowed. Procedure: To find interest, take the product of the principal, the interest rate and the time. Thus, the formula for finding interest is: Interest = Principal * Rate * Time which is also written as I = P*R*T Now that we have a procedure and a formula, we can solve the problem above. Problem: To buy a computer, Raquel borrowed $3,000 at 9% interest for 4 years. How much money did she have to pay back? Solution: Principal = $3,000, Interest rate = 0.09 and Time = 4 I = P*R*T I = (3000)*(0.09)*(4) = $1,080.00 Answer: Raquel had to pay back $3,000 in principal plus $1,080 in interest for a total of $4,080.00. Remember that interest is the charge for borrowing the money. So Raquel had to pay back the original amount borrowed (principal) AND the interest. Let's look at some more examples of interest. Example 1: When Kevin bought a new office phone, he borrowed $1,200 at a rate of 18% for 9 months. How much interest did he pay? Solution: P = $1,200, R = 0.18 and T = 0.75 Remember that the interest formula asks for the time in years. However, the time was given in months. So to get the time in years we represent 9 months as 9/12 of a year, or 0.75. I = P*R*T I = (1200)*(0.18)*(0.75) = 162.00 Kevin paid $162.00 in interest.

Answer:

In the problem and example above, money was borrowed and interest was paid for borrowing that money. A person can also earn interest on money invested. Let's look at an example of this. Example 2: Isabella deposited $500 into a savings account at a local bank that earned 5 % interest per year. How much interest does she earn per year? Solution: P = $500, R = 0.055 and T = 1 I = P*R*T

I = (500)*(0.055)*(1) = $27.50 Answer: Isabella earns $27.50 per year in interest from her local bank.

In Example 2, the bank was the borrower and Isabella was the lender. Let's revise our definition of interest so that it applies to all of these problems. Interest is the amount of money the lender is paid for the use of his/her money. Interest is the money you pay to use someone else's money. In either case, the more money being used and the longer it is used for, the more interest must be paid. Let's look at some more examples of interest. Example 3: Jodi owes $38,000 in students loans for college. The interest rate is 7.25% and the loan will be paid off over 10 years. How much will Jodi pay altogether? Solution: P = $38,000, R = 7.25% and T = 10 I = P*R*T I = (38000)*(.0725)*(10) = $27,550.00 Jodi will have to pay $38,000 in principal plus $27,550 in interest for a total of $65,550.00.

Answer:

Example 4: Julia put $1,000 into a savings account that earns 4% in interest. How much will she have after 3 months? Solution: P = $1000, I = 0.04 and T = 0.25 Remember that the interest formula asks for the time in years. However, the time was given in months. So to get the time in years we represent 3 months as 3/12 of a year, or 0.25. I = P*R*T I = (1000)*(0.04)*(0.25) = $10.00 Answer: Julia will have $1,000 in principal plus $10 of interest earned for a total of $1,010.00.

In each of the examples above, the interest rate was applied only to the original principal amount in computing the amount of interest. This is known as simple interest. When the interest rate is applied to the original principal and any accumulated interest, this is called compound interest. Simple and compound interest are compared in the tables below. In both cases, the principal is $100.00 is and the interest rate is 7%.

Simple Interest
Year Principal Interest Ending Balance 1 2 3 4 $100.00 $7.00 $100.00 $7.00 $100.00 $7.00 $100.00 $7.00 $107.00 $114.00 $121.00 $128.00 1 2 3 4

Compound Interest
Year Principal Interest Ending Balance $100.00 $7.00 $107.00 $7.49 $114.49 $8.01 $122.50 $8.58 $107.00 $114.49 $122.50 $131.08

$100.00 $7.00

$135.00

$131.08 $9.18

$140.26

As you can see, compound interest can end up being higher than simple interest for the same principal and the same rate. If you were borrowing money, would you want to pay simple interest or compound interest? If you wee lending or investing money, would you want to earn simple interest or compound interest? Summary: Interest is the amount of money the lender is paid for the use of his/her money. Interest is the money you pay to use someone else's money. In either case, the more money being used and the longer it is used for, the more interest must be paid. So whether you are borrowing or lending (investing) money, interest is found by taking the product of the principal, the interest rate and the time in years. The formula for findingsimple interest is: Interest = Principal * Rate * Time which is also written as I = P*R*T

Writing Percents as Fractions

Download this Percentages Unit! Download all 9 lessons, extra practice and solutions for just $9.95! Download Now

Unit 4> Lesson 5 of 9

Problem: One team won 18 out of every 25 games, and another team won 72% of all games played. Which team has a better winning record? We know from previous lessons that a percent is a ratio whose second term is 100. So we get the following: 72% = 72 out of 100 = 18 out of 25 = = and

Solution: Both teams have the same winning record. Any percent can be written as a fraction in lowest terms. One method for reducing a fraction to lowest terms is to divide both the numerator and the denominator by their greatest common factor (GCF). Let's look at an example of this. Example 1: Write each percent as a fraction in lowest terms: 55%, 41%, 36%

Solution
Percent 55% 41% 36% Fraction Reducing Lowest Terms

In Example 1, the GCF of 55 and 100 is 5; the GCF of 41 and 100 is 1; and the GCF of 36 and 100 is 4. Note that when the GCF is 1, this means that the fraction is already in lowest terms. Let's look at some more examples. Example 2: Write each percent as a fraction in lowest terms: 7%, 12.5%, 62.5%

Solution
Percent 7% 12.5% 62.5% Example 3: Write each percent as a fraction in lowest terms: 67.5%, 56.25%, 13.1% Fraction Reducing Lowest Terms

Solution
Percent 67.5% 56.25% 13.1% Fraction Reducing Lowest Terms