The ratio of expenditure and savings of a person is 5 : 3. If the income increases by 20% and the expenditure increases by 16\(\frac{2}{3}\)%, then the person’s savings increase by:
Answer & explanation
Correct answer: option 4
Ratio of expenditure and savings = 3 : 5
Income = 8R
Increased Income = \(\frac{6}{5}\) x 8R = \(\frac{48R}{5}\)
Increased expenditure = \(\frac{7}{6}\) x 3R = \(\frac{7R}{2}\)
Change in savings = \(\frac{48R}{5}\) - \(\frac{7R}{2}\) = \(\frac{61R}{10}\)
Percentage change = \(\frac{\frac{61R}{10}}{\frac{48R}{5}}\) x 100 = 63.5%