Salary of a person is first increased by 20%, then it is decreased by 20%. Change in his salary is

Given:

Initial Salary = \(S\)

First increase = 20%

Then decrease = 20%

Formula Used:

Final Salary = Initial Salary × (1 + Increase%) × (1 - Decrease%)

Calculation:

Initial Salary = \(S\)

After 20% increase:

\(S_{\text{new}} = S × (1 + \frac{20}{100})\)

\(S_{\text{new}} = S × 1.20\)

After 20% decrease on new salary:

\(S_{\text{final}} = S_{\text{new}} × (1 - \frac{20}{100})\)

\(S_{\text{final}} = S × 1.20 × 0.80\)

\(S_{\text{final}} = S × 0.96\)

Change in Salary = Final Salary - Initial Salary

Change in Salary = \(S × 0.96 - S\)

Change in Salary = \(S(0.96 - 1)\)

Change in Salary = \(S(-0.04)\)

Percentage change in Salary = \(\frac{-0.04S}{S} × 100\)

Percentage change in Salary = -4%

The correct answer is option 1: 4% decreased.