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Algebra Percents and Simple Interest Study Guide

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Updated on Oct 3, 2011

Introduction to Algebra Percents and Simple Interest

Mathematics is made of 50 percent formulas, 50 percent proofs, and 50 percent imagination.

—Author Unknown

In this lesson, you'll learn how to use algebra to find the percent increase or percent decrease between two values and how to calculate simple interest.

A percent is a number out of one hundred. For example, 36% is 36 out of 100. We can answer some simple percent questions without algebra:

What is 10% of 60? 10% = 0.10. Multiply 60 by 0.10: (60)(0.10) = 6. Therefore, 6 is 10% of 60.

What percent is 12 of 48? Divide 12 by 48: 12 ÷ 48 = 0.25, 0.25 = 25%. Therefore, 12 is 25% of 48.

Finally, 20% of what number is 15? 20% = 0.20. Divide 15 by 0.20: 15 ÷ 0.20 = 75. Therefore, 15 is 20% of 75.

Percent Increase

When percent questions get a bit tougher, we can use algebra to help us find the answers. If a value increases from 12 to 15, we can find the percent increase by subtracting the original value from the new value and dividing by the original value:

But what if we were given the original value and the percent increase, and we needed to find the new value? We can use the same formula, but let x represent the new value.

Example

What is 20 after a 40% increase?

The original value is 20 and the new value is x. Because the percent increase is equal to the new value minus the old value divided by the old value, subtract 20 from x and divide by 20. Set that fraction equal to 40%, which is 0.40:

Multiply both sides of the equation by 20, and then add 20 to both sides:

    x – 20 = 8
    x = 28

Algebra also comes in handy if we are given a new value after a percent increase and we are asked to find the original value.

Example

After a 24% increase, a value is now 80.6. What was the original value?

We can use the same formula that we used to solve the preceding question, but this time, we let x represent the original value instead of the new value. The difference between the new value and the original value is 80.6 – x. We divide that by the original value, x, and set it equal to the percent increase, 24%, or 0.24:

Multiply both sides of the equation by x, and then add x to both sides:

0.24x = 80.6 – x

1.24x = 80.6

Divide both sides by 1.24:

x = 65

Percent Decrease

The formula for percent decrease is very similar to the one for percent increase. If a value decreases from 15 to 12, we can find the percent decrease by subtracting the new value from the original value and dividing by the original value:

Tip:

When finding a percent increase or decrease, be sure to divide the difference between the two values by the original value. The percent increase from one value to a second value is not equal to the percent decrease from that second value to the first value. Looking back at our two examples, going from 12 to 15 was a 25% increase, but going from 15 to 12 was only a 20% decrease. In both examples, the difference between 12 and 15 is 3, but in the percent increase example, we divided 3 by 12, because 12 was the original value, and in the percent decrease example, we divided 3 by 15, because 15 was the original value.

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