Finance Example: Percentage Change (Car Value)

Finance Example: Percentage Change (Car Value)


This is a problem regarding percentage
change. So we’re told that the value of a car dropped from $7,400 to $6,800 over the last year. What percent decrease is this? So we’re
talking about a percentage change, and remember that a percentage change is
equal to the amount of change divided by the original amount. Notice carefully
that we’re using the original amount, the amount before it changed. So all we need to do is find out how
much the price changed from the first year to the second year and then divide that by
the original amount, which is going to be the $7400 – the amount before it changed. So
the difference between $7400 and $6800 is $600, so if we divide the
$600 (the change) by the original amount (the $7400) we get an answer of 0.081. But the question asked about a percentage change so we need to rewrite
this decimal in terms of a percent by moving the decimal point to two places
to the right. So our answer is that the price of the car dropped by 8.1%

About the Author: Michael Flood

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