Question : Raman spends 80% of his income. If his income is increased by 25% and the expenditure increases by 10%, what will be the percentage increase in his savings?
Option 1: 17%
Option 2: 70%
Option 3: 77%
Option 4: 85%
Correct Answer: 85%
Solution :
Let Raman's income be Rs. 100.
Raman spends 80% = $\frac{80}{100}× 100$ = Rs. 80
Raman's savings = 100 – 80 = Rs. 20
If his income is increased by 25%,
New income $=\frac{125}{100} × 100 = 125$
If his expenditure increases by 10%,
New expenditure $=(\frac{110}{100}) × 80 = 88$
New savings = 125 – 88 = Rs. 37
The increase in savings is (37 – 20) = Rs. 17
Percentage change = $\frac{\text{Difference}}{\text{Initial value}} × 100$
Percentage increase in savings $=\frac{17}{20} × 100 = 85$%
Hence, the correct answer is 85%.
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