We start with the initial numbers of students, 40 and multiply that by .8 for 40 * 0.8 = <<40*0.8=32>>32 who own puppies.
That the number of students with puppies, 32, and multiply that by .25 to find out how many own both puppies and parrots, 32 * 0.25 = <<32*0.25=8>>8 who own puppies and parrots.
The answer is <<8=8>>8.
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