Correct Answer - Option 2 : 26.6%
Given:
Initial Expenditure = 75%
Initial Savings = 25%
Increase in income = 25%
Increase in savings = 20%
Concept:
To solve this type of question, consider the initial income to be 100. Then, calculate the rest of the data using simple % rules.
Formula used:
% increase/Decrease = [(Final value – Initial value)/initial value] × 100
Calculation:
Let the income be 100x.
Expenditure = 75% of 100x = 75x
Savings = 25% 0f 100x = 25x
% increase in come = 25%
New income = 125x
% increase in savings = 20% 0f 25x = 5x
∴ New savings = 25x + 5x = 30x
⇒ New expenditure = New income – new savings = 125x – 30x = 95x
∴ % increase in expenditure = [(95x – 75x)/75x] × 100
= 80/3
= 26.6%