Raghav spends 80% of his income. If his income increases by 12% and his expenditure increases by 17.5%, then what is the percentage decrease in his savings?%
Answer & explanation
Correct answer: option 2
80% = \(\frac{4}{5}\) & 12% = \(\frac{3}{25}\)
Let income of Raghav = 100x
Expenditure = \(\frac{4}{5}\) × 100x = 80x
Saving = 100x - 80x = 20x
Now,
Increased income = 100x + \(\frac{3}{25}\) × 100x = 112x
Increased Expenditure = 80x + \(\frac{17.5}{100}\) × 80x
= 94x
New saving = 112x - 94x = 18x
Decrease in percentage of saving = \(\frac{20x - 18x }{20x}\) ×10 = 10%