How do you take the Rate % and turn it into a growth factor? Example rate of 4 %, growth is 1+.04=1.04........

Question

So I guess i am having trouble with turning my % into a decimal I know i just move the decimal 2 places to the left so 4%=.04 10%=.10

but what about 100%
or 500%

Why do we turn the % into a decimal anyways?
Thank you!

ok so if i was figuring out 500% compound intrest of 2500 dollars annually (i know this will never happen) would i write it as 2500(1+5.00) ?

Answer 1

If money grows at 4% annually, then you take the money you have now, say $1000 and multiply it by 1.04 [the 1 represents your initial investment, in this example it's $1000]. This interest rate will give $1,040 at the end of one year.

If your investment should grow at 100%, then you take the 1, which represents your initial investment and add another 1 for that year's growth. So you get $1000 x 2 = $2,000 value of your investment at the end of the year.

You can do the same for 500% or any number; just remember that the first 1 represents your initial or starting amount.


p.s. to answer your added comment: the answer is yes. To get to the total value of your investment at the end of the year you would take your initial investment, $2500 (1 + 5) = 15000. Again remember that your end of year total is $15K but your growth is only the 500% or $12.5K.

Answer 2

To turn a per cent into a decimal just divide it by 100.

If you want to use it to multiply just use the decimal and add one to keep the original amount.

100 % = 1 + 1 = 2

500% = 1 + 5 =6

Answer 3

x% means x/100
So 30% means 30/100 = 0.30
100% = 100/100 =1
500% = 500/100 = 5 Is it clear now?

Answer 4

100% = 1.00, 500% = 5.00

Decimals are what we use for calculation. Percents are a common-folk convenience.