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Number Sense · Topic XXI

Percentages: Averages, Profit & Loss, Discounts & Interest

A percentage is just a ratio to 100 — but that single idea powers school grades, sale prices, bank interest, and business profit calculations everywhere.

EDUSAMBAM Editorial Team | 24 min read | Mathematics
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This is the final topic in our Number Sense strand — and arguably the most useful in daily life. Percentages tie directly back to Ratio & Proportion, then branch out into averages, profit and loss, discounts, and interest — the exact math behind shopping, banking, and business.

1.What Is a Percentage?

A percentage is a ratio that always compares a part to a whole of exactly 100. The symbol % literally means "per hundred."

Example

25% means 25 out of every 100 — the same amount as the fraction 25/100, or 1/4 in simplest form.

2.Converting Between Percentages, Fractions, and Decimals

PercentageFractionDecimal
25%1/40.25
50%1/20.5
60%3/50.6
75%3/40.75

To convert a decimal to a percentage, multiply by 100. To convert a percentage to a decimal, divide by 100.

3.Finding a Percentage of a Quantity

Example

Find 25% of 80. Convert to a decimal: 25% = 0.25. Multiply: 0.25 × 80 = 20.

4.Finding What Percentage One Number Is of Another

Example

45 out of 180 — what percentage is that? (45÷180) × 100 = 25%.

5.Percentage Increase and Decrease

Example: Increase

A price rises from $80 to $100. Increase = 100−80=20. Percentage increase = (20÷80)×100 = 25%.

Example: Decrease

A price falls from $100 to $80. Decrease = 100−80=20. Percentage decrease = (20÷100)×100 = 20%.

"A 20% increase followed by a 20% decrease brings you back to the original value"

This feels intuitive, but percentage changes are always calculated from a different base value each time.

The fix: 100 increased by 20% becomes 120. But 120 decreased by 20% is 120 − 24 = 96, not back to 100. The second percentage is calculated on the new, larger value, not the original — so equal opposite percentage changes never fully cancel out.

6.Finding the Original Value (Reverse Percentage)

Example

After a 20% increase, a price is $120. What was the original price? $120 represents 120% of the original. Original = 120 ÷ 1.20 = $100.

7.Averages (Mean)

The average (or mean) of a set of numbers is their sum divided by how many numbers there are. It's closely tied to percentages, since both describe a single representative value standing in for a whole group.

Example

Find the average of 12, 15, 18, 21, 24. Sum = 12+15+18+21+24 = 90. Count = 5. Average = 90÷5 = 18.

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8.Profit and Loss

Every sale has a Cost Price (CP, what the seller paid) and a Selling Price (SP, what the buyer pays). If SP is higher, it's a profit; if lower, it's a loss — and both are always calculated as a percentage of the Cost Price, never the selling price.

Example: Profit

CP=$200, SP=$250. Profit = 250−200=$50. Profit% = (50÷200)×100 = 25%.

Example: Loss

CP=$300, SP=$270. Loss = 300−270=$30. Loss% = (30÷300)×100 = 10%.

Calculating profit% as (SP−CP)÷SP × 100

Dividing by the selling price instead of the cost price gives a smaller, incorrect percentage.

The fix: profit and loss percentages are always calculated against the Cost Price, since that's the seller's original investment. For CP=$200, SP=$250: the correct profit% is 50÷200×100=25%, not 50÷250×100=20% (which incorrectly divides by SP).

9.Discounts

A discount is a percentage reduction off a Marked Price (MP) — the original listed price before any sale.

Example

MP=$500, discount=15%. Discount amount = 0.15×500=$75. Selling price = 500−75=$425.

10.Simple Interest

Simple interest is calculated only on the original amount borrowed or invested — the Principal (P) — using the formula SI = (P × R × T) ÷ 100, where R is the annual rate and T is time in years.

Example

Principal=$1,000, Rate=5% per year, Time=3 years. SI = (1000×5×3)÷100 = $150. Total amount owed = 1000+150=$1,150.

11.Compound Interest (A Quick Comparison)

Unlike simple interest, compound interest is recalculated on the growing total each year — interest earns interest.

Example

Principal=$1,000, Rate=5%, Time=2 years. Compound amount = 1000×(1.05)² = $1,102.50, giving compound interest of $102.50 — compared to just $100 in simple interest over the same 2 years. The extra $2.50 comes from year 2's interest being calculated on $1,050, not the original $1,000.

Real-World Example

A store marks a jacket at $80, discounts it 25% for a sale ($60), then a shopper resells it at $75 — a profit of $15 on their $60 cost, or 25% profit. Meanwhile, $2,000 saved in a bank account at 4% simple interest for 3 years earns (2000×4×3)÷100=$240 in interest.

Did You Know?

The percent symbol (%) evolved from the Italian "per cento" ("for a hundred"), gradually abbreviated over centuries from "P c°" into the two-circle-and-slash symbol used today.

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12.Why This Topic Matters

Percentages are the most consistently used piece of math in adult life — reading a sale discount, comparing loan interest rates, calculating a tip, understanding exam grades, or reading a company's profit margins. This topic — and the Number Sense strand it completes — hands you the tools to check every one of those numbers for yourself, rather than taking them on faith.

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1.What is 40% of 150?
2.36 is what percentage of 90?
3.A price rises from $60 to $75. What is the percentage increase?
4.After a 20% increase, a price is $96. What was the original price?
5.Does a 20% increase followed by a 20% decrease return to the original value?
6.Find the average of 8, 12, 16, and 20.
7.A shopkeeper buys a chair for $80 (CP) and sells it for $100 (SP). What is the profit percentage?
8.A trader buys a fan for $150 and sells it for $120. What is the loss percentage?
9.A jacket marked at $80 is discounted by 25%. What is the selling price?
10.What is the simple interest on $1,000 at 5% per year for 3 years?
11.What total amount is owed after the simple interest in the previous question?
12.Why is compound interest on $1,000 at 5% for 2 years ($102.50) more than simple interest over the same period ($100)?
13.Profit and loss percentages should always be calculated as a percentage of which value?
14.Convert 3/8 to a percentage.
15.A $2,000 deposit earns 4% simple interest per year for 3 years. How much interest is earned?
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