A person could save 20% of his income. A year later, his income increased by 25% but he could save the same amount only as before. By what percentage has his expenditure increased?
Answer & explanation
Correct answer: option 3
Let salary of Men = 100x
Saving = 20% of 100x = 20x
Expenditure = 100x - 20x = 80x
New income = 100x + 25% of 100x = 125x
Saving remains same . So, saving = 20x
New expenditure = 125x - 20x = 105x
Increase in Expenditure = \(\frac{105x - 80x }{80x }\) × 100
= 31.25%