Question : A saves 35% of his income. If his income increases by 20.1% and his expenditure increases by 20%, then by what percentage do his savings increase or decrease? (correct to one decimal place)
Option 1: 18.5% of decrease
Option 2: 21.9% of increase
Option 3: 20.3% of increase
Option 4: 19.75% of decrease
Correct Answer: 20.3% of increase
Solution :
Let the income of A be 100.
Savings = 35, expenditure = 65
According to the question,
Increase in income of A = 20.1% = 100 × $\frac{20.1}{100}$ = 20.1
New income = 100 + 20.1 = 120.1
Increase in the expenditure of A = 20% = 65 × $\frac{20}{100}$ = 13
New expenditure = 65 + 13 = 78
New savings = 120.1 – 78 = 42.1
Percentage increase in savings $=\frac{42.1 - 35}{35} × 100=\frac{710}{35}= 20.3\%$
Hence, the correct answer is an increase of 20.3%.
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