Question

Find the percentage change in her return on her original investment.

• A. Increase = 17.5%
• B. Decrease = 13.5%
• C. Increase = 12.5%
  
• D. Decrease = 11.5%

Answer 1

The correct option is C Increase = 12.5%

Investment=Rs.19200

Dividend =15%

Nominal value =Rs.100

According to the question Mrs P.chandra invested Rs.19200 in 15% Rs.100 share at 20% discount

$\therefore$Market Value of share$=100-\frac{20}{100}\times 100=Rs.80$

Total number of shares $=\frac{\text{Investment}}{\text{Market value of each share}}$

$\therefore$ No.of shares $=\frac{19200}{80}=240$

Dividend of one share=15% of 100=Rs.15

$\therefore$Dividend for first year$=240\times 15=Rs.3600$

Now each share sold Rs. 90

$\therefore$The proceeds including dividend = Number of share $\times$ Rate $+$ dividend

$\Rightarrow 240\times 90+3600=Rs.25200$

Hence the sum invested=Rs.25200

Nominal value=Rs.50

Market value=Rs.42

Dividend=20%

$\therefore$No. of share=$\frac{25200}{42}=600$

Dividend on 1 share=20% of 50=$\frac{20}{100}\times 50=Rs.10$

$\therefore$Annual income for second year$=600\times 10=Rs.6000$

Since we have increase in return$=6000-3600=2400$

Percentage increase$=\frac{2400}{19200}\times 100=12.5$%