Multiplying Money by Whole Numbers & Decimals

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  • 0:05 Why Multiply Money?
  • 0:51 Multiplying Money by…
  • 2:33 Multiplying Money by Decimals
  • 4:59 Lesson Summary
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Lesson Transcript
Instructor: Kevin Newton

Kevin has edited encyclopedias, taught history, and has an MA in Islamic law/finance. He has since founded his own financial advice firm, Newton Analytical.

Want to find out how much you and your friends can spend on a party if you all have the same amount of money? Or maybe you'd want to buy investments one day in hopes of being rich! In either event, you'll need to know how to multiply money.

Why Multiply Money?

When dealing with money, math is important. Most obviously, being able to subtract and add are vital skills when figuring out exactly how much money you've got. Could you imagine trying to budget without being able to add or subtract? Think about having to count out each quantity of money you need for everything you want, as well as your bills, every time you wanted to make sure that you could afford something. Needless to say, adding and subtracting are really important.

Still, multiplying is also very important. For example, say that you are trying to figure out how much a number of identical books would cost. You could simply add the cost of each book together, but that would take forever. By multiplying, we have a much faster way.

Multiplying Money by Whole Numbers

Let's first look at a few examples of multiplying money by whole numbers.

Say that you wanted to buy all your friends a copy of the same book as an end-of-summer gift. The book is $15 including tax, and you've got seven friends you wish to purchase the book for. You've got 110 bucks. Do you have enough money? Again, we could simply subtract 15 from 110, then 15 from 95, and so on until you've subtracted 15 seven times, but that's a pain!

Instead, you could calculate the final cost first by multiplying the number of books by the cost of each book. To do this, we would first put the money amount on top and the other number on the bottom. We'd get $15 * 7 = $105. Since your total is smaller than $110, you've got enough money to purchase everyone a book as well as buy yourself a bookmark!

For another example, let's say that you were trying to figure out what your budget was for a party. You and your seven friends from earlier agreed to have a party to celebrate the end of school. You each can contribute 40 bucks. So, how much money does that give you? Again, you could add your $40 with everyone else's $40, but that would take a while. Instead, just multiply it all out. Since there are eight of you and each of you can contribute 40 bucks, we'd get $40 * 8 = $320, which is what your budget for the party could be.

Multiplying Money by Decimals

So far, we've only been multiplying money by whole numbers. That's pretty useful, but there are times when we have to use decimals.

One of the most unfortunate of these is calculating taxes. Yes, I know that everyone dislikes taxes and when you bought those books from earlier, chances are you had to pay sales tax. Sales tax is almost always less than 10 percent, but it still must be paid.

To calculate the sales tax on a purchase, you have to multiply the total price by the tax rate. Remember, percentages are just decimals that show a fraction of 100. So, if it is a 6% tax rate, you move the decimal to the left of the 6 by two places to get .06. Add the total tax to your price for the item and you've got how much you actually have to pay at the cash register.

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