The effect on savings — Percentages Aptitude Question
The effect on savings: A man spends 75% of his income. His income rises by 20% and his expenditure by 10%. Answer and worked solution on CodeKairo.
- Topic: Percentages
- Section: Quantitative Aptitude
- Difficulty: Medium
- Time target: 90 seconds
Question
A man spends 75% of his income. His income rises by 20% and his expenditure by 10%. By what percent do his savings increase?
Options
- 25%
- 40%
- 50%
- 60%
Show the answer and the worked solution
Correct answer: C. 50%
Worked solution
- Income 100, expenditure 75, savings 25.
- New income = 120; new expenditure = 75 × 1.10 = 82.5.
- New savings = 120 − 82.5 = 37.5.
- Increase = 12.5/25 = 50%.
Answer: 50%.
The idea
Savings is a residue, so it must be computed, never assumed to move with either figure. A small percentage of a large income easily outweighs a large percentage of small savings.
Shortcut. Rise in savings = rise in income − rise in spending = 20 − 7.5 = 12.5, against savings of 25 — half, so 50%.
Common trap. 40% — taking the 10% rise on the whole income (10) rather than on the 75 spent, which leaves savings of 35.