Question

After completing MBA from Symbiosis College Pune, John get a placement in Bain and Company, where he saves 20% of his earning. After a year, his income gradually increases by 30% but his savings remain the same. Then find the correct statement.

a) His expenditure increases by 40%.

b) His expenditure decreases by 37.5%.

c) His  expenditure remain the same.

Choose the correct answer by finding the correct options:

1. a only
2. b only
3. c only
4. None of above

Answer 1

Correct Answer - Option 1 : a only

Given ∶

He saves 20% of his salary.

After a year, His income increases by 30%. 

Formula Used∶

Increasement in value = Increased value - Original value

Increase in percentage = [Increasement in value/Original value] × 100

Calculation∶

Let John's income = Rs.100

Then Saving = 20% of 10 = Rs.20

So, Expenditure = 100 - 20 = Rs.80

After increment of 30%, new salary = Rs.130

But savings are same = Rs.20

So, New Expenses = 130 - 20 = Rs.110

Increase in Expenses,

⇒ 

 [(110 - 80)/80] × 100 = 37.5 %

∴ The increasement in his expenses is of 37.5%.