Question : A man spends 75% of his income. His income increases by 20% and his expenditure also increases by 10%. Find the percentage increase in his savings.
Option 1: 25%
Option 2: 50%
Option 3: 15%
Option 4: 10%
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Correct Answer: 50%
Solution :
Let his income be Rs. 100. Then, expenditure will be Rs. 75, and savings will be Rs. 25.
His income increases by 20% and the expenditure also increases by 10%.
New income =120% of 100 = Rs. 120
New Expenditure = 110% of 75 = Rs. 82.50
New savings = (120 – 82.50) = Rs. 37.50
Percentage increase in savings = $\frac{37.5–25}{25}$ × 100 = 12.5 × 4 = 50%
Hence, the correct answer is 50%.
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