A person earns ₹16,000 per month and spends 80% of his income and saves the remaining amount. If his income increases by 20% and expenditure by 10%, find the percentage of increase in his savings.
Show answer & explanation
Correct answer: D
Explanation
The correct answer is Option 4 i.e. 60%.
Initial income = ₹16,000
Expenditure = 80% of income
⇒ 80/100 × 16000 = Rs. 12800
Savings = Income - Expenditure
⇒ 16000 - 12800 = Rs. 3200
Income increases by 20%.
So, the new income = 16000 × (1 + 20/100)
⇒ 16000 × 1.2 = Rs. 19200
Expenditure increases by 10%.
The new expenditure = 12800 × (1 + 10/100)
⇒ 12800 × 1.1 = Rs. 14080
New Savings = New Income − New Expenditure
⇒ 19,200 − 14,080 = Rs.5,120
Now,
The percentage increase in savings = (New savings - Old savings)/Old savings × 100
⇒ (5120 - 3200)/3200 × 100
⇒ 1920/3200 × 100 = 60%
Thus, the percentage increase in his savings is 60%.