๐ Compound Percentages
When percentages are applied one after another, they don't simply add up. Each percentage is applied to the new amount.
โ ๏ธ Common Mistake:
A 20% increase followed by a 20% decrease does NOT equal the original!
1
Start: $100
2
+20%: $100 ร 1.20 = $120
3
-20%: $120 ร 0.80 = $96 (not $100!)
Final = Original ร (1 + rateโ) ร (1 + rateโ) ร ...
๐ฏ Try It Yourself
Try It Yourself
$200 increases by 10%, then decreases by 10%. What's the final amount?
First: $200 ร 1.10 = $220. Then: $220 ร 0.90 = ?
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