Ajay spends % of his income on different household items. If his income increases by 25% and expenditure increase by 20%, then the effect on his savings will be:
Show answer & explanation
Correct answer: D
Explanation
The correct answer is option 4 i.e. 35%.
% = 2/3
Let Ajay's initial income = 300
Initial expenditure = 200
Initial savings = 300 - 200 = 100
New income = 300 × (125/100) = 375
New expenditure = 200 × (120/100) = 240
New savings = 375 - 240 = 135
Increase in savings = 135 - 100 = 35
Therefore, Ajay's savings will increase by 35%.