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)
Show answer & explanation
Correct answer: A
Explanation
The correct answer is option 1 i.e. 20.3% of increase
Let the income of A = 100x
Savings of A = 100x × 35% = 35x
Expenditure = 65x
Increased income = 100x × 120.1% = 120.1x
Increased expenditure = 65x × 120% = 78x
New savings = 120.1x - 78x = 42.1x
% increase = (42.1x - 35x)/35x × 100 = 20.3%