Raman spends 75% of his income. If his income increases by 20% and expenditure also increases by 10%, then by what percent will Raman's savings increase?
Show answer & explanation
Correct answer: C
Explanation
The correct answer is option 3 i.e. 50%.
Let initial income = ₹100
Initial expenditure = 75% of 100 = ₹75
Initial savings = 100 - 75 = ₹25
New income = 120% of 100 = ₹120
New expenditure = 110% of 75 = ₹82.5
New savings = 120 - 82.5 = ₹37.5
Percentage increase in savings = (37.5 - 25)/25 × 100 = 12.5/25 × 100 = 50%