Question 116

A man spends 75% of his income. His income increases by 20% and his expenditure also increases by 10%. The percentage of increase in his savings is

Solution

let the income of person be Rs y

So his expenditure be 75% of income which is = 0.75y

Saving = y- 0.75y = 0.25y

Now after increment of 20 % in income the new income becomes = 1.2y

Given that bew expenditure is 10% more than previous one.So , new expenditure is = 1.1 × 0.75y = 0.825y

New savings = 1.2y - 0.825y = 0.375y

Percentage increase in savings =$$\frac {0.375y-0.25y}{0.25y}$$×100 = 50%

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