📚 Compound Percentages
When percentages are applied one after another, they don't simply add up. Each percentage is applied to the new amount.
⚠️ Common Mistake:
A 20% increase followed by a 20% decrease does NOT equal the original!
1
Start: $100
2
+20%: $100 × 1.20 = $120
3
-20%: $120 × 0.80 = $96 (not $100!)
Final = Original × (1 + rate₁) × (1 + rate₂) × ...
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$200 increases by 10%, then decreases by 10%. What's the final amount?
First: $200 × 1.10 = $220. Then: $220 × 0.90 = ?
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