Question : A man spends 75% of his income. If his income increases by 28% and his expenditure increases by 20%, then what is the increase or decrease percentage in his savings?
Option 1: 52% decrease
Option 2: 52% increase
Option 3: 13% decrease
Option 4: 13% increase
Correct Answer: 52% increase
Solution :
Man spends 75% of his income.
Income increases by 28%
Expenditure increases by 20%
Let the Income of a man be 100.
Expenditure = 75% of 100 = $(\frac{75}{100}) × 100$ = 75
Saving = Income – Expenditure
Initial saving = 100 – 75 = 25 --------------(1)
Now as per the question,
His income increased by 28%
His new income = Old income + 28% of Old income
His new income = ($\frac{128}{100}$) × 100 = 128
Similarly, his expenditure increased by 20%
His new expenditure = ($\frac{120}{100}$) × 75
His new expenditure = 90
Saving(new) = income(new) – expenditure(new)
Saving(new) = 128 – 90 = 38 -------------(2)
Now, percentage increase in savings = $\frac{(38 - 25)}{25} × 100$ -------------(from (1) and (2))
= 13 × 4 = 52%
$\therefore$ The percentage increase in saving is 52%.
Hence, the correct answer is 52% increase.
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