Question : In 2021, Sam received an annual increment in his salary by 40% but due to the recession in 2022, the company started taking cost-cutting measures, and his salary was reduced by 15%. What was the net change in his salary?
Option 1: 17% increase
Option 2: 19% increase
Option 3: 9% decrease
Option 4: 11% increase
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Correct Answer: 19% increase
Solution :
Let the salary of Sam be $x$.
According to the question,
In 2021, he got an increment of 40%.
⇒ New salary $=x+40$%$\text{ of }x=x+0.4x=1.4x$
In 2022, his salary was reduced by 15%
⇒ New salary after his salary was reduced $=1.4x-15\%\text{ of }1.4x=1.4x-0.21x=1.19x$
The net change in salary $=1.19x-x=0.19x$
Required percentage $=\frac{0.19x}{x}\times 100=19$%
Hence, the correct answer is a 19% increase.
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