Chapter 3

Percent
and Percent
Change
Microsoft® PowerPoint® Presentation by
Copyright © 20220 McGraw-Hill Education Limited. Hussam Jawad and Howard Umrah, Durham College.
Previously updated by Julie Howse, St. Lawrence College
 Learning Objectives (cont’d)
LO1 Given any two of these (% rate, portion,
base), solve for the third.
LO2 Solve problems involving percent change
LO3 Calculate the income yield, capital gain
yield, and rate of total return on stocks
and mutual funds.
LO4 Combine rates of total return for successive
holding periods.
LO5 Calculate market share and market growth for
a specific brand or market.
3-2
 Introduction
• Percent is commonly used in business for
reporting.
• Reporting percent has different applications.
For Example:
i. The percent decrease or increase of a
companies profit
ii. The percent of a specific expense of total
costs
iii. Percent is also used to determine investment
returns and market share

3-3
 The Basic Percentage Problem
• The basic percentage formula is:

𝑃𝑜𝑟𝑡𝑖𝑜𝑛
𝑅𝑎𝑡𝑒 =
𝐵𝑎𝑠𝑒

• Given any two of the three quantities, we

can calculate the third.

3-4
 Example: The Basic Percentage Problem

What is 25% of $63.00?

𝑃𝑜𝑟𝑡𝑖𝑜𝑛
𝑅𝑎𝑡𝑒 =
𝐵𝑎𝑠𝑒
𝑃𝑜𝑟𝑡𝑖𝑜𝑛
0.25 =
$63.00
0.25×$63.00 = 𝑃𝑜𝑟𝑡𝑖𝑜𝑛
𝑷𝒐𝒓𝒕𝒊𝒐𝒏 = $𝟏𝟓. 𝟕𝟓
3-5
 Example: The Basic Percentage Problem

$40 is 16% of what amount?

𝑃𝑜𝑟𝑡𝑖𝑜𝑛
𝑅𝑎𝑡𝑒 =
𝐵𝑎𝑠𝑒
$40.00
0.16 =
𝐵𝑎𝑠𝑒
$40.00
𝐵𝑎𝑠𝑒 =
0.16
𝑩𝒂𝒔𝒆 = $𝟐𝟓𝟎. 𝟎𝟎
3-6
 Skill Check
i. What percent is $12.50 of $130.75?

ii. What amount is 0.45% of $2500?

iii. $70 is 45% of what amount?

iv. In a one-month period, a convenience store

had sales of $200,750 from its gas pumps
and sales of $90,600 from other in-store
products. What percent of total sales were
from gasoline?

3-7
 Percent Change
• When a quantity changes, the amount of
change is often expressed as a percentage of
the initial value.

𝑉! − 𝑉"
𝑐= ×100%
𝑉"

Vi = Initial (or beginning or original) value

Vf = Final (or ending or new) value
c = Percent change

3-8
 Example 3.2A – Calculating the Percent
Change
The minimum wage in Alberta in 2012 was $9.75 per hour.
This increased to $15.00 per hour in 2018. What is the
percent change in the minimum wage for this time period?

2018 𝑤𝑎𝑔𝑒 − 2012 𝑤𝑎𝑔𝑒

𝑐= ×100%
2012 𝑤𝑎𝑔𝑒
$15.00 − $9.75
𝑐= ×100%
$9.75
$5.25
𝑐= ×100%
$9.75
𝒄 = 𝟓𝟑. 𝟖𝟓%
𝑻𝒉𝒆 𝒎𝒊𝒏𝒊𝒎𝒖𝒎 𝒘𝒂𝒈𝒆 𝒊𝒏 𝑨𝒍𝒃𝒆𝒓𝒕𝒂 𝒊𝒏𝒄𝒓𝒆𝒂𝒔𝒆𝒅 𝒃𝒚 𝟓𝟑. 𝟖𝟓% 𝒇𝒓𝒐𝒎 𝟐𝟎𝟏𝟐 𝒕𝒐 𝟐𝟎𝟏𝟖.
3-9
 Example 3.2B – Calculating the Percent
Change
The share price of Klondike Resources rose from $2 on January 1,
2021 to $4 on December 31, 2021. It fell back to $2 by December 31,
2022. Calculate the percent change in share price during 2021,
during 2022, and during the entire two-year period.
𝐹𝑜𝑟 2021: 𝐷𝑒𝑐. 31, 2021 𝑝𝑟𝑖𝑐𝑒 − 𝐽𝑎𝑛. 1, 2021 𝑝𝑟𝑖𝑐𝑒
𝑐= ×100%
𝐽𝑎𝑛. 1, 2021 𝑝𝑟𝑖𝑐𝑒
$4 − $2
𝑐= ×100% = 100%
$2
𝐹𝑜𝑟 2022: $2 − $4
𝑐= ×100% = −50%
$4
𝐹𝑜𝑟 𝑡ℎ𝑒 𝑒𝑛𝑡𝑖𝑟𝑒 2 𝑦𝑒𝑎𝑟𝑠:
$2 − $2
𝑐= ×100% = 0%
$2
𝑻𝒉𝒆 𝒔𝒉𝒂𝒓𝒆 𝒑𝒓𝒊𝒄𝒆 𝒊𝒏𝒄𝒓𝒆𝒂𝒔𝒆𝒅 𝒃𝒚 𝟏𝟎𝟎% 𝒊𝒏 𝟐𝟎𝟐𝟏 𝒂𝒏𝒅 𝒕𝒉𝒆𝒏 𝒅𝒆𝒄𝒓𝒆𝒂𝒔𝒆𝒅 𝒃𝒚 𝟓𝟎% 𝒊𝒏 𝟐𝟎𝟐𝟐. 𝑭𝒐𝒓
𝒕𝒉𝒆 𝒆𝒏𝒕𝒊𝒓𝒆 𝒕𝒘𝒐 − 𝒚𝒆𝒂𝒓 𝒑𝒆𝒓𝒊𝒐𝒅, 𝒕𝒉𝒆𝒓𝒆 𝒘𝒂𝒔 𝒏𝒐 𝒏𝒆𝒕 𝒑𝒓𝒊𝒄𝒆 𝒄𝒉𝒂𝒏𝒈𝒆. 3-10
 Example 3.2E – Calculating Vi

What amount when increased by 230% equals $495?

$495 − 𝑉𝑖
230% = ×100%
𝑉𝑖
$495 − 𝑉𝑖
2.3 =
𝑉𝑖
2.3𝑉𝑖 = $495 − 𝑉𝑖
2.3𝑉𝑖 + 𝑉? = $495
3.3𝑉𝑖 = $495

𝑽𝒊 = $𝟏𝟓𝟎
3-11
 Skill Check
i. Profits in a Company in 2018 were 3.2
million and increases to 4.1 million in
2019. What was the percent

ii. The total cost of a coat (including HST of

13% on the retail price) is $252.62. What
is the retail price of the coat?

iii. How much is $325 after an increase of

160%?
3-12
 Investment Returns
• There are two ways you can benefit from an
investment – income and a capital gain.

• Income is money that you receive while you

hold the investment.

• A capital gain is the increase in value when

you sell the investment.

3-13
 Investment Returns
Examples of various investments:

3-14
 Investment Returns

• The total return consists of income earned

during the holding period and the capital
gain realized when the investment is sold.
3-15
 Investment Yields
• Although the income, capital gain and total return
are dollar amounts, investors often prefer to
express these as a percentage of the initial value.
𝐼𝑛𝑐𝑜𝑚𝑒
𝐼𝑛𝑐𝑜𝑚𝑒 𝑦𝑖𝑒𝑙𝑑 = ×100%
𝑉𝑖

𝐶𝑎𝑝𝑖𝑡𝑎𝑙 𝑔𝑎𝑖𝑛 𝑉𝑓 − 𝑉𝑖
𝐶𝑎𝑝𝑖𝑡𝑎𝑙 𝑔𝑎𝑖𝑛 𝑦𝑖𝑒𝑙𝑑 = ×100% = ×100%
𝑉𝑖 𝑉𝑖
𝑅𝑎𝑡𝑒 𝑜𝑓 𝑡𝑜𝑡𝑎𝑙 𝑟𝑒𝑡𝑢𝑟𝑛 = 𝐼𝑛𝑐𝑜𝑚𝑒 𝑦𝑖𝑒𝑙𝑑 + 𝐶𝑎𝑝𝑖𝑡𝑎𝑙 𝑔𝑎𝑖𝑛 𝑦𝑖𝑒𝑙𝑑
𝐼𝑛𝑐𝑜𝑚𝑒 + 𝐶𝑎𝑝𝑖𝑡𝑎𝑙 𝑔𝑎𝑖𝑛
= ×100%
𝑉𝑖
3-16
 Example: Investment Yields
Shares in Megacorp were priced at $12.00 one year ago.
They are trading at $12.75 today. During the year, they also
paid a dividend of $0.40 per share. Calculate the income
yield, capital gain yield and rate of total return.

$0.40
𝐼𝑛𝑐𝑜𝑚𝑒 𝑦𝑖𝑒𝑙𝑑 = ×100% = 3.33%
$12.00

$12.75 − $12.00
𝐶𝑎𝑝𝑖𝑡𝑎𝑙 𝑔𝑎𝑖𝑛 𝑦𝑖𝑒𝑙𝑑 = ×100% = 6.25%
$12.00

𝑅𝑎𝑡𝑒 𝑜𝑓 𝑡𝑜𝑡𝑎𝑙 𝑟𝑒𝑡𝑢𝑟𝑛 = 3.33% + 6.25% = 9.58%

3-17
 Skill Check
Shares purchased one year ago for $9290 are
now worth $11,420. During the year, the
shares paid dividends totalling $310.
Calculate the shares’:

i. Income yield.
ii. Capital gain yield.
iii. Rate of total return.

3-18
 Compounding Rates of Return
• When rates of return are cumulative for
successive periods, we have compounding
rates of return.

• For example, imagine you invested $100 and

earned 20% in year 1 followed by 25% in
year two. How much would you earn in
total?

3-19
 Compounding Rates of Return (cont’d)
• The amount earned in year 2 is 25% of the
value at the end of year 1.

• So, we would actually end up with:

$100 earns 20% in year 1 to become $120
$120 earns 25% in year 2 to become $150

3-20
 Compounding Rates of Return
• We can create a general formula for
compounding rates of return by re-arranging
our percent change formula:

𝑉𝑓 = 𝑉! (1 + 𝑐)

• Extending this to handle multiple years, we

end up with:
𝑉𝑓 = 𝑉! 1 + 𝑐1 1 + 𝑐2 (1 + 𝑐3) … (1 + 𝑐" )
3-21
 Example: Compounding Rates of Return

A stock rose by 6% in year one, 4% in year two and

9% in year three. Calculate the overall percent
increase in price for the three years.

𝑉𝑓 = 1 1 + 0.06 1 + 0.04 (1 + 0.09)

𝑉𝑓 = 1 1.06 1.04 (1.09)
𝑉! − 𝑉"
𝑉𝑓 = 1.201616 𝑐=
𝑉"
×100%
(1.201616 − 1)
𝑐= ×100 = 20.16%
1

𝑇ℎ𝑖𝑠 𝑟𝑒𝑝𝑟𝑒𝑠𝑒𝑛𝑡𝑠 𝑎 20.16% 𝑖𝑛𝑐𝑟𝑒𝑎𝑠𝑒

𝑜𝑣𝑒𝑟 𝑡ℎ𝑒 𝑡ℎ𝑟𝑒𝑒 𝑦𝑒𝑎𝑟𝑠.
3-22
 Example 3.3E: Compounding Rates of Return

Hanako invested in a stock that doubled in the first year and rose
another 50% in the second year. Now, at the end of the third year,
Hanako is surprised to discover that the stock’s price is up only 80%
from her purchase price. By what percentage did the stock’s price
change in the third year?

We are told that 𝑉𝑓 = 1.80𝑉? , therefore

1.80𝑉? = 𝑉? (1 + 1.00)(1 + 0.50)(1 + 𝑐3)
1.80𝑉? = 𝑉? (3.0)(1 + 𝑐3)
1.80 = (3.0)(1 + 𝑐3)
0.60 = (1 + 𝑐3)
0.60 − 1 = 𝑐3
𝑐3 = −0.40 𝑠𝑜, 𝑡ℎ𝑒 𝑝𝑟𝑖𝑐𝑒 𝑑𝑒𝑐𝑙𝑖𝑛𝑒 𝑏𝑦 40% 𝑖𝑛 𝑦𝑒𝑎𝑟 3
3-23
 Skill Check
Adjusted for stock splits, the price of Google
shares rose 36.05%, 22.18%, 18.44%, and
15.00% in the years 2014 to 2017,
respectively. In 2018, the share prices rose
35.48%.
i. What was the overall five-year percent
change in the price of Google shares?
ii. If the share price at the end of 2018 was
$160.55, what was the price at the
beginning of 2014?
3-24
 Calculating Market Share and
Growth
• Businesses collect data, or metrics, to track
and evaluate their performance. These
metrics are often referred to as key
performance indicators (KPIs).

• Two of these KPIs are market share and

market growth.

3-25
 Calculating Market Share and
Growth
• Two of these KPIs are market share and
market growth.

3-26
 Example 3.4A: Calculating Market Share

Doritos tortilla chips had sales of $2.09B in 2021. The

tortilla chip sector had total North American sales of
$5.06B. What market share does Doritos hold in the
tortilla chip sector in North America?

$2.09𝐵
𝑀𝑎𝑟𝑘𝑒𝑡 𝑆ℎ𝑎𝑟𝑒 = ×100% = 41.30%
$5.06𝐵

Doritos has a 41.3% market share of the North

American tortilla chip market.
3-27
 Example 3.4B: Calculating Brand Sales

Honda’s sales for October 2021 represent 14.6% of all

automotive sales in Canada for that month. If the sales
volume of all vehicles sold in Canada in October 2021 is
596,015 vehicles, how many Hondas were sold for the same
time period? Round your answer to the nearest whole vehicle.
Given the Honda brand market share is 14.6% and total industry
sales are 596,015, we can use Formula (3-5) to calculate:
𝐻𝑜𝑛𝑑𝑎 𝑠𝑎𝑙𝑒𝑠
0.146 =
596,015

𝐻𝑜𝑛𝑑𝑎 𝑠𝑎𝑙𝑒𝑠 = 0.146×596,015 = 87,018.19

Honda sales for October 2021 were 87,018 Honda vehicles sold.
3-28
 Example 3.4E: Calculating Market Growth

The global smart speaker market in North American

had sales of $4.66B in 2020 and ballooned to sales
of $6.98B in 2021. Amazon-brand smart speakers
had a 70% share of this market in 2020. This fell to a
68.2% market share in 2021.

Compare the growth of the Amazon brand to the

market growth of the smart speaker market from
2020 to 2021.

3-29
 Example 3.4E: Calculating Market Growth

Calculate the market growth for the smart speaker industry

using Formula (3-6):
$6.98 − $4.66
𝐼𝑛𝑑𝑢𝑠𝑡𝑟𝑦 𝑔𝑟𝑜𝑤𝑡ℎ = ×100% = 49.79%
$4.66

2020 𝑠𝑎𝑙𝑒𝑠 𝑓𝑜𝑟 𝐴𝑚𝑎𝑧𝑜𝑛 = 0.7×4.66𝐵 = $3.26𝐵

2021 𝑠𝑎𝑙𝑒𝑠 𝑓𝑜𝑟 𝐴𝑚𝑎𝑧𝑜𝑛 = 0.682×6.98𝐵 = $4.76𝐵

$4.76𝐵 − $3.26𝐵
𝐴𝑚𝑎𝑧𝑜𝑛 𝑚𝑎𝑟𝑘𝑒𝑡 𝑔𝑟𝑜𝑤𝑡ℎ = ×100% = 46.01%
$3.26𝐵

The Amazon brand had growth of 46.01% from 2020 to 2021 while the smart
speaker industry saw growth of 49.79%.

3-30
 Skill Check
i. Kellogg's two most popular brands of cereal are
Frosted Flakes, with a 22.7% market share, and
Special K, with a 14.3% market share. If sales in the
cereal market were $9.38B for the year, what were
sales for Frosted Flakes and Special K?
ii. Acme Ltd. had sales of $425M in 2018, which
represents a 60% market share in the industry. In
2019 their market share decreased to 52% with sales
of $680M. What is the market growth for the Acme
Ltd?
iii. The top selling brand of blenders sold 32,000 units at
$105 per unit in 2019. What is their market share if the
cordless vacuum market had sales of $12.9M?

3-31
 Chapter 3

End of Chapter

Microsoft® PowerPoint® Presentation by

Copyright © 2022 McGraw-Hill Education Limited. Hussam Jawad and Howard Umrah, Durham College.
Previously updated by Julie Howse, St. Lawrence College