Question

Mr Brown spends 65% of his monthly income and saves the rest. After being promoted, his salary increases by 40% and his expenses increase by 20%. Find the percentage change in his savings.

Answer 1

There is a percentage increase of 77.1% in savings

Explanation:

The answer can be determined by assigning a value to the income of Mr Brown.

Let Mr. Brown's initial income = 100

Percentage spent = 65%

Amount spent = 100 x 0.65 = 65

Percentage he saves = 100 - 65% = 35%

Amount he saves = 100 x 0.35 = 35

Salary after increase = 1.40 x 100 = 140

Increase in expenses = 1.2 x 65 = 78

Amount saved after increase in income = 140 - 78 = 62

Percentage increase = (new amount saved / previous amount saved) - 1

Percentage increase = (62 / 35) - 1 = 0.771 = 77.1%