A person saves 25% of his income. If his income increases by 20% and his saving remains the same, then what will be the increased percentage of his expenditure?
Answer & explanation
Correct answer: option 4
Let initial income = 100
Saving is 25% ,
So , Expenditure = \(\frac{3}{4}\) × 100 = 75
Increased Income = 100 + \(\frac{1}{5}\) × 100 = 120
( Saving remains same )
So , New Expenditure = 120 - 25 = 105
Percentage increase in Expenditure = \(\frac{105 - 75}{75}\) × 100
= \(\frac{20}{75}\) × 100
= 26\(\frac{2}{3}\)%