Hi harshit,
In this approach, the water quantity is increasing by 10% of itself
In reality, the water quantity initially decreases by a value of 10% of itself and then increases by a value of 10% entire mixture(not water alone  i.e.
Stage                      Water quantity           Alcohol quantity          Total
Initially                             175                              700                        875
1st iteration       175-17.5+87.5=245        700-70=630                 875
2nd iteration      245-24.5+87.5=308        630-63=567                 875
Finally, water quantity = 308/875=32.5%

As per your method, the water level rise such as this
175  to 175+17.5=192.   to 192.5+19.25=211.75

On the other hand, if you observe the value change in alcohol content, it is consistently reducing by 10%
Hope this helps:)

Hi Harshit,

In your approach, you arent considering the case where you lose some amount of water when you take out 10 % of the mixture. You multiply by 1.1 when you are  adding 10% and not when you are replacing.

Hope this helps.

Hi Manoj M S ,

We are told that 10% of the mixture is replaced with water. => Since Alcohol is not getting added, it just reduces by 10%,

Let's say we have a mixture of 80 ml water and 20 ml Alcohol; now, if 10 ml of this solution is removed (10 ml will have 8 ml water and 2 ml alcohol) => 72 ml water and 18 ml Alcohol remain. (18 is nothing but 90% of 20ml).

I hope this helps.

Hi Amir Rahman,
Yes, you can apply this formula here in the replacement question. I hope this helps!