2.2.4 Applications of Percent Key Objectives • Write equations to solve percent applications. • Use the simple interest formula. • Use estimation when solving percent applications. Key Terms • A commission is a fee paid to a person who makes a sale. • Interest is the amount of money charged or earned for the borrowing or lending of money. • Principal is the initial amount of money borrowed or saved. • A tip is an amount added to a bill for service. • Sales tax is an amount added to the price of an item and is a percent of the item’s cost. Formulas • Simple Interest Paid Annually I = Prt , where I is the simple interest earned when a principal P is invested (or borrowed) for t years at interest rate r . Example 1 Business Application A commission is money paid to a person or a company for making a sale. Usually the commission is a percent of the sale amount. For example, if a salesperson earns a 5% commission on all sales and they sell an item for $200, then the salesperson earns 5% of $200 in commission. Because 5% of $200 is 0.05(200) = $10, the salesperson is paid a $10 commission on the $200 sale. So, to find a commission, multiply the percent by the total sales.
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