The Math Dude : Tips to Boost Your Business Math Skills, Part 1 :: Quick and Dirty Tips

3/11/13 11:50 AM

Tips to Boost Your Business Math Skills, Part 1

Episode 74: August 25, 2011 Real World Math

by Jason Marshall Whether youre working for a business, running a business of your own, or running the business of your own household, there are certain math skills you literally cannot afford to ignore. Things like calculating and understanding percentages, simple and compound interest, average values, and the always scarysounding standard deviation (shudder!). If youre unsure about any of these things, its your lucky day because for the next two weeks were headed to business math boot camp. SPONSOR: http://stitcher.com/math. Use the code MATH to be entered to win $1000.

Tip 1: Learn to Quickly Add and Multiply Numbers in Your Head

Theres no point in learning lots of fancy business math if you havent first developed your ability to do basic arithmetic quickly and easily in your head. Seriously, you can have a fancy calculator and know a bunch of formulas, but the single fastest way to get a lot of bang for your buck is to learn how to mentally do things like add and multiply numbers. Just think how popular and invaluable youll be when you can run the numbers in meetings faster than everybody else, put together budgets on the spot, and tally up totals quicker than most people can operate a cash register. Mental math is the sort of thing that takes some practice to master. Since we dont have a lot of time to review all the techniques right now, Ive put together a new hour-long audiobook on the subject called The Math Dudes 5 Tips to Mastering Mental Math thatll walk you step-by-step through 5 of the best mental math secrets and get you up and running quickly. Download it for less than $1 from Audible, iTunes, or Amazon. But no matter what method you use to learn, the bottom line is that brushing up on your mental math skills is essential!

Tip 2: Learn to Quickly Calculate Percentages

Percentages are one of the main elements of business math. People love to use them to talk about how sales have grown, how the value of one company compares to the value of another, and on and on. Fortunately, percentages are easyonce you know the trick to finding 1% and 10% of any number. To find 10%, start by writing the number in decimal form and then simply move the decimal point one position to the left. To find 1% of a number, just move the decimal point two positions to the left. So 10% of $53.00 is just $5.30. And 1% of $53.00 is just 53 cents. Why is that so useful? Because once youve found 1% or 10%, its easy to find something like 12% since thats just 10% + 1% + 1% or 15% since thats just 10% plus half of 10%. If youd like to learn more about this, check out my earlier articles on using the power of 10% to help you calculate tips and sales prices. Theres also some additional percentage calculating tips and practice in the Mastering Mental Math audiobook that I mentioned earlier.

Tip 3: Learn to Use the Simple Interest Formula

Interest is an idea that shows up all over the place in the business world. The money you make on investments like savings accounts, CDs, stocks, and bonds, and the money you owe on loans like mortgages and credit cards is based on the idea of interest. In particular, its calculated from an interest rate which is usually given as some percentage (see, there are those percentages again!) of the total investment or debt owed each year.

To perform calculations with simple interest, you just need to remember that you are pretty: I = P x r x t.

The simplest kind of interest is calledquite logicallysimple interest. To perform calculations with simple interest, you just need to remember that you are pretty. What? Yes, say it with me folks: I am pretty. And, of course, by that I mean the formula: I=Pxrxt The I here stands for the interest earned or owed, the P stands for the principal amount of the investment or debt, the r stands for the interest rate per year or some other unit of time (which is usually given as a percentage, but which youll need to turn into a decimal number), and the t represents the total time over which the interest is calculated.

Simple Interest Formula Examples

http://mathdude.quickanddirtytips.com/tips-to-boost-your-business-math-skills-part-1.aspx

Page 1 of 3

The Math Dude : Tips to Boost Your Business Math Skills, Part 1 :: Quick and Dirty Tips

3/11/13 11:50 AM

For example, if you have $1,000 invested for 2 years in a CD earning 5% annually, at the end of those 2 years you will have earned $100. Just plug in the numbers: I = $1000 x 0.05 x 2 = $100 Of course, you can use the fact that you are pretty (aka, I = P x r x t) to do more than simply calculate the interest when you know the principal, rate, and time. In fact, given any 3 of these 4 quantities (interest, principal, rate, and time), you can use a bit of algebra to calculate the fourth. Want to know how long it would take to earn a certain amount of interest on some principal at some rate? Just turn I = P x r x t into t = I / (P x r) and youre ready to go! There are many other problems you can solve using the simple interest formula. Well talk about some examples in next weeks conclusion to this business math boot camp.

Number of the Week

Before we finish up, its time for this weeks featured number selected from the various numbers of the day posted to the Math Dudes Facebook page and to QDTs new blog, The Quick and Dirty. This weeks number is 379.3 feet. Why? Because thats the height of the largest living organism on the planetthe coast redwood tree known as Hyperion (whose cousins I visited on a recent camping trip). To give a bit of perspective as to just how gargantuan this tree is, 379.3 feet is a little over 126 yards. Which means that Hyperion is a few yards longer than an American football field measured from the back of one end zone to the other! Kind of boggles the mind, doesnt it?

Wrap Up
Okay, thats all for today. Remember to become a fan of the Math Dude on Facebook where youll find a new number of the day or math puzzle posted each and every weekday. And if youre on Twitter, please follow me there too. Finally, if you have math questions, feel free to send them my way via Facebook, Twitter, or by email at mathdude@quickanddirtytips.com. And dont forget to pick up a copy of my new book: The Math Dudes Quick and Dirty Guide to Algebra. Until next time, this is Jason Marshall with The Math Dudes Quick and Dirty Tips to Make Math Easier. Thanks for reading, math fans!
SHARE Facebook Twitter Stumbleupon Reddit Digg Delicious

Was this Tip Helpful?

Yes No

Comments for Tips to Boost Your Business Math Skills, Part 1

Subscribe to Comments

Math Dude
11/28/2011 4:08:22 PM

@Al: The equation for simple interest in the article and the example that uses it are both correct. The type of interest you're talking about (where the interest earned each year is reinvested) is called *compound* interest (I've written a few articles about that in the past). In this article we're talking about *simple* interest where the interest earned is not reinvested each year.

AL
11/26/2011 10:11:27 AM

I'm afraid that the simple interest equation that you have given is incorrect. In the example given, $1000 invested for 2 years at 5% p.a will give $102.50 interest. End of year 1 = $1000 x 1.05 = $1050 ($50 of interest accrued). End of year 2 = $1050 x 1.05 = $1102.50 ($52.50 of interest accrued)

Linda
9/6/2011 11:49:51 AM

@Dottie: When dealing with parentheses within parentheses, work from the outside in.

Dottie
9/5/2011 5:00:06 PM

I need help. I know that in Algebra that Parentheses get done first, but I am lost when it comes to parentheses inside of parentheses. Can you help?
http://mathdude.quickanddirtytips.com/tips-to-boost-your-business-math-skills-part-1.aspx Page 2 of 3

The Math Dude : Tips to Boost Your Business Math Skills, Part 1 :: Quick and Dirty Tips

3/11/13 11:50 AM

Daniel
9/4/2011 2:09:08 AM

Thank you Math Dude, unfortunately the audibook it's not available in the Mexican store... I'm going to try Audible, wish me luck!!!

Math Dude
9/2/2011 10:55:15 AM

Daniel: I'm not sure why the link isn't loading, but you can also get to the audiobook in iTunes by searching for "math dude mental math". Thanks!

Daniel
9/2/2011 1:23:39 AM

Hi I would like to buy the audiobook form iTunes, but the link doesn't load... And I couldn't found it on the iTunes store by searching!!

http://mathdude.quickanddirtytips.com/tips-to-boost-your-business-math-skills-part-1.aspx

Page 3 of 3