Question
Download Solution PDFThe ratio of expenditure to saving of a person is 7 : 3. If the income increases by 12% and the expenditure increases by 8%, then by what percentage his savings will increase? (Correct to 2 decimal places)
Answer (Detailed Solution Below)
Detailed Solution
Download Solution PDFGiven:
Increase in income = 12%
Increase in expenditure = 8%
Expenditure : savings ratio = 7 : 3
Concept:
The change in savings can be found by using the formula: (new income - new expenditure) / old savings × 100%.
Calculation:
⇒ Old income = Expenditure + savings = 10 (assuming the sum of the ratio as the base)
⇒ New income = Old income × 1.12 = 10 × 1.12 = 11.2
⇒ New expenditure = Old expenditure × 1.08 = 7 × 1.08 = 7.56
⇒ Increase in savings = New income - New expenditure = 11.2 - 7.56 = 3.64
⇒ Percentage increase in savings = (Increase in savings / Old savings) × 100% = (3.64 / 3) × 100% = 21.33%
Therefore, the savings will increase by 21.33%.
Last updated on Jul 8, 2025
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