2. Copyright © 2008 Pearson Education Canada3-1 Chapter 3 Ratio, Proportion, and Percent Contemporary Business Mathematics with Canadian Applications Eighth Edition S. A. Hummelbrunner/K. Suzanne Coombs PowerPoint: D. Johnston

3. Copyright © 2008 Pearson Education Canada3-2 Objectives After completing chapter three, the student will be able to: Set up ratios and solve allocation problems. Set up proportions and use proportions to solve problems involving equivalence of ratios. Find percents, rates percent, and the base for problems involving percentages. (continued)

4. Copyright © 2008 Pearson Education Canada3-3 Objectives (continued) Solve problems involving the percent of increase and decrease. Solve business problems involving percents. Perform currency conversions. Set up an index number. (continued)

5. Copyright © 2008 Pearson Education Canada3-4 Objectives (continued) Use the Consumer Price Index to determine the purchasing power of the dollar and compute real income. Compute federal income taxes using federal income tax brackets and tax rates. Calculate simple rates of return between two dates for mutual funds.

6. Copyright © 2008 Pearson Education Canada3-5 Ratios

7. Copyright © 2008 Pearson Education Canada3-6 Allocation Involving Ratios

8. Copyright © 2008 Pearson Education Canada3-7 Allocation According to Ratios Allocate 660 in the ratio of 3:2 Method B 3 + 2 = 5 (3/5) x 660 = 396 (2/5) x 660 = 264

9. Copyright © 2008 Pearson Education Canada3-8 Proportions

10. Copyright © 2008 Pearson Education Canada3-9 Basic Percentage Problem Percentage = Rate x Base

11. Copyright © 2008 Pearson Education Canada3-10 Finding the Rate

12. Copyright © 2008 Pearson Education Canada3-11 Finding the Base

13. Copyright © 2008 Pearson Education Canada3-12 Finding Rate of Increase or Decrease

14. Copyright © 2008 Pearson Education Canada3-13 Currency Conversion The exchange rate equals the value of one nation’s currency expressed in terms of another nation’s currency.

15. Copyright © 2008 Pearson Education Canada3-14 Exchange Rates

16. Copyright © 2008 Pearson Education Canada3-15 Index Numbers An index number expresses the relative change in the value of an item at different points in time.

17. Copyright © 2008 Pearson Education Canada3-16 Index Numbers

18. Copyright © 2008 Pearson Education Canada3-17 Consumer Price Index Most widely used indicator of changes in overall level of goods and services in Canada Currently based on 1992 price levels Published monthly by Statistics Canada

19. Copyright © 2008 Pearson Education Canada3-18 Purchasing Power of Dollar

20. Copyright © 2008 Pearson Education Canada3-19 Calculating Real Income

21. Copyright © 2008 Pearson Education Canada3-20 Personal Income Taxes Taxes imposed by the federal and provincial governments on the earned income of residents of Canada. Income tax brackets for 2006 are shown in Table 3.3 in your text. The brackets are adjusted annually based on changes in the CPI in excess of 3%

22. Copyright © 2008 Pearson Education Canada3-21 Marginal Tax Rate The rate at which your next dollar of earned income is taxed. Directly proportional to your earnings and the tax bracket you are in. Varies from province to province depending on tax rates and surtaxes in the particular provinces.

23. Copyright © 2008 Pearson Education Canada3-22 Summary Ratios, proportions, and percents are tools used in applications dealing with percent increase or decrease, currency conversion, index numbers, and personal income taxes.