Calculate The Percentage Difference Between Two Dollar Amounts
Calculating the percentage difference between two dollar amounts is a useful skill to have, especially when analyzing financial data or comparing prices. It allows you to see how much one amount has increased or decreased in relation to the other. In this article, we will explain how to calculate the percentage difference between two dollar amounts in a step-by-step manner.
What is Percentage Difference?
Percentage difference is a way to express the difference between two values as a percentage of one of the values. It is calculated by taking the absolute value of the difference between the two values, dividing it by the average of the two values, and then multiplying the result by 100.
Formula for Calculating Percentage Difference
The formula for calculating percentage difference is as follows:
Percentage Difference = (|Value 1 - Value 2| / ((Value 1 + Value 2)/2)) x 100
Where Value 1 is the original value, Value 2 is the new value, and "|" represents the absolute value.
Step-by-Step Guide to Calculating Percentage Difference
Now that we have the formula for calculating percentage difference, let's walk through a step-by-step guide to help you understand the process. Assume that you want to calculate the percentage difference between two dollar amounts: $100 and $150.
Step 1: Find the absolute value of the difference between the two values.
|$100 - $150| = $50
Step 2: Find the average of the two values.
(($100 + $150)/2) = $125
Step 3: Divide the absolute value of the difference by the average of the two values.
$50/$125 = 0.4
Step 4: Multiply the result by 100 to get the percentage difference.
0.4 x 100 = 40%
Therefore, the percentage difference between $100 and $150 is 40%.
Why Calculate Percentage Difference?
Calculating percentage difference is useful in many situations, especially in finance and economics. For example, it can be used to compare the performance of two stocks or investments over a certain period of time. It can also be used to analyze price changes in goods and services and to make informed purchasing decisions.
Examples of Calculating Percentage Difference
Let's look at a few more examples of how to calculate percentage difference:
Example 1:
You bought a stock for $50 and sold it for $75. What is the percentage difference?
Percentage Difference = (|50 - 75| / ((50 + 75)/2)) x 100
Percentage Difference = 33.33%
Example 2:
The price of a product increased from $50 to $75. What is the percentage difference?
Percentage Difference = (|50 - 75| / ((50 + 75)/2)) x 100
Percentage Difference = 33.33%
Conclusion
Calculating the percentage difference between two dollar amounts is a simple and useful skill to have. It allows you to understand the change in values over a certain period of time or to compare prices of goods and services. By following the formula and step-by-step guide outlined in this article, you can easily calculate the percentage difference between any two dollar amounts.