The ratio of expenditure and savings of a person is 5 : 3. If the income increases by 20% and the expenditure increases by 10%, then the person's savings increase by:
Show answer & explanation
Correct answer: D
Explanation
The correct answer is Option 4 i.e. (110/3)%
The ratio of expenditure and savings of a person is 5 : 3.
Let expenditure = 500 and savings = 300
Total income = 800
If the income increases by 20% and the expenditure increases by 10%,
New income = 800 + 800 × 0.2 = 960
New expenditure = 500 + 500 × 0.1 = 550
Then,
The person's savings = 960 - 550 = 410
Increase in savings = 410 - 300 = 110
Hence,
% increase = (110/300) × 100 = (110/3)%