Suppose the ratio of income to expenditure is 8 : 5. If income rises by 40% and expenditure falls by 10%, and the initial expenditure is ₹10,000, what is the amount (in ₹) of saving after these changes?
- AOption (a)
13,400
- BOption (b)
13,200
- COption (c)
13,500
- DOption (d)
13,300
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Correct answer
13,400
Why this answer is correct
Shortcut Trick
Income : Expenditure ratio is 8 : 5.
Expenditure 5 units = ₹10,000 ⇒ 1 unit = ₹2,000 ∴ Initial Income = 8 × 2,000 = ₹16,000.
New Income = 16,000 ± 40% = 16,000 × 1.4 = ₹22,400.
New Expenditure = 10,000 − 10% = 10,000 × 0.9 = ₹9,000.
New Saving = 22,400 − 9,000 = ₹13,400.
∴ The correct answer is ₹13,400.
Alternate Method
Given: Ratio of Income (I1) to Expenditure (E1) = 8 : 5. Initial Expenditure = ₹10,000. Income rise = 40%. Expenditure fall = 10%.
Formula: Saving = Income − Expenditure
Calculations:
⇒ Let Initial Income = 8x and Initial Expenditure = 5x.
⇒ 5x = 10,000 ⇒ x = 2,000.
⇒ Initial Income = 8 × 2,000 = ₹16,000.
⇒ New Income = 16,000 + (40/100 × 16,000) = 16,000 + 6,400 = ₹22,400.
⇒ New Expenditure = 10,000 − (10/100 × 10,000) = 10,000 − 1,000 = ₹9,000.
⇒ New Saving = New Income − New Expenditure = 22,400 − 9,000 = ₹13,400.
∴ The correct answer is ₹13,400.
Additional Information
Income, Expenditure, and Savings Relationship
Income = Expenditure + Savings. Any change in two variables directly affects the third.
Percentage Change Formula
New Value = Original Value × (100 ± Percentage Change)/100.
Ratio Unitary Method
If a : b is the ratio and the value of 'b' is V, then the value of 1 unit = V/b and value of 'a' = (V/b) × a.