A man sold 400 (Rs.20) shares of a company, paying 5% at Rs.18 and invested the proceeds in (Rs.10) shares of another company paying 7% at Rs.12. How many (Rs.10) shares did he buy and what was the change in his income ?

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Solution

Total nominal value of 400 shares at Rs. 20 per share= $400 \times 20 = R s .8000$
$∴$ Dividend=5% of Rs.8000= $\frac{5}{100} \times 8000 = R s .400$
He sell shares at Rs.18 per share
$∴$ Sales proceed $= 400 \times 18 = R s .7200$

He invest this amount in buying shares (Rs.10) at Rs.12 per share
$∴$ No. of share $= \frac{7200}{12} = 600$
$∴$ N.V of 600 shares= $600 \times 10 = R s .6000$
His income=7% of 6000 $= \frac{7}{100} \times 6000 = R s .420$
Change in his income $= 420 - 400 = R s .20$

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