Suppose the cost of a particular item last year was $320 and increased to $360 this year. What is the percent increase?

First, calculate the dollar amount of the increase, which is $40. From here we divide that number by the original amount of $320. Multiply that decimal result by 100 to convert to percent. So the increase is 12.5 %

Suppose a item depreciates in value by 20% every year. The original value of the item is $1,200. What is the value of the item after two years?

We take 20% of $1,200 which is .20 times 1,200, which is 240. Subtract 240 from the initial 1,200 to get 960. After the first year the value is $960.

Now take 20% of 960, which is 192. Subtract 192 from 960 to get 768. The value of the item after two years is $768.

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