Question

Ram spends 40% of his income. If his income increase by 10% and expenditure decrease by 20%, then find the percentage increase or decrease in savings.
1. 30%
2. 25%
3. 15%
4. 10%

Answer 1

Correct Answer - Option 1 : 30%

Given:

Expenditure = 40% of Income

Increase in income = 10%

Decrease in expenditure = 20%

Formula Used:

Income = Expenditure + Savings

Percent Increase/Decrease = ((y – x)/x) × 100

where, x → Initial value, y → Final value

Calculations:

Let the income of Ram be Rs. 100

Expenditure = 40% of Income

⇒ Expenditure = Rs. (40/100) × 100

⇒ Expenditure = Rs. 40

Now, Income = Expenditure + Savings

⇒Savings = Rs. (100 – 40) = Rs. 60

Now, Income increased by 10% and expenditure decreased by 20%

⇒ New income = (110/100) × 100

⇒ New income = Rs.110

⇒ New expenditure = (80/100) × 40

⇒ New expenditure = Rs. 32

New savings = Rs. (110 – 32)

⇒ New savings = Rs. 78

Percent Increase = ((y – x)/x) × 100

Percentage increase in savings = (78 – 60)/60 × 100

⇒ Percentage increase in savings = (18/60) × 100

Percentage increase in savings = 30%

∴ The percentage increase in savings is 30%.