• Financial Math

  • An overview of Corporate Finance
  • Statistics for Finance
  • Basic Financial Terms
  • Financial Portfolio Analysis

Percentage Change

Suppose that the price of a commodity was $50 and it changed to $55. Hence the price is increased by $5. Consider another example where price is changed from $100 to $105, again the price is changed by $5 (an analogous example could be where student A obtained 45 marks out of 50, and student B obtained 70 marks out of 100, so who got better marks??). So usually we see change in percentage terms, and it could be calculated using simple formula

Now, where changed from $50 to $55, the percentage change is

And, where price changed from $100 to $105, the percentage change is

Example The price of a commodity was $80 Find the percentage change if it is changed to:
(a) $70
(b) $90
(c) stays the same
Solution
(a)

The negative sign shows that the price is decreased by 12.5%.

(b)

(c) As the price stays the same, so, 0% change (or no change).