Remember that 1% is equivalent to 1 hundredth, or 0.01. What does 0.5% mean, then? Well, it's 0.5 hundredths, or five-tenths of a hundredth.
If we look at that in terms of fractions, that translates to:
[tex] \frac{5}{10}\times \frac{1}{100} = \frac{5}{1000}[/tex]
So, 0.5% is five thousandths, or 0.005, as a decimal. Combining that with 12%, which is 0.12 or twelve hundredths as a decimal, we have:
12.5% = 0.12 + 0.005 = 0.125
