The percentage increase formula is used to compare the growth in two quantities with different initial values. For example, consider the following two businesses.
Final Valuation of the Business
We can see that both businesses increased by $5,000. Does this mean that they are growing at the same rate? No, because the growth has to be compared with the initial value. We use the percentage increase formula for this.
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Thepercentage increase formula is the ratio of the increase in the quantity to its initial value multiplied by 100. Since the percentage has to be a positive quantity, we take the absolute value of the initial value. i.e.,
Percentage increase = Quantity Increase / Initial value x 100
From the previous example,
Increase in business-1 = 15000 - 10000 = $5000.
Increase in business-2 = 35000 - 30000 = $5000.
Let us calculate the percentage increase in each of business-1 and business-2.