Question

Mr. D'souza purchased 200 shares of FV Rs 50 at a premium of Rs 100. He received 50% dividend on the shares. After receiving the dividend he sold 100 shares at a discount of Rs 10 and remaining shares were sold at a premium of Rs 75. For each trade he paid the brokerage of Rs 20. Find whether Mr. D'souza gained or incurred a loss ? by how much ?

Answer 1

Amount invested:

= cost of each share *number of shares purchased

$=(50+100)\times 200=Rs.30,000$

Net income of Mr. D’souza:

= total money received on selling 200 shares + total dividend received – total brokerage paid on 3 trades

$=\left[\right(50-10)\times 100+(50+75)\times 100]+200\times (\frac{50}{100}\times 50)-(20\times 3)$

$=4000+12,500+5000-60$

$=16,500+5000–60$

$=Rs.21,440$

Since the net income of Mr. D’souza is less than the amount invested, so Mr. D’souza incurred a loss.

Loss incurred = Amount invested – Net income of Mr. D’souza

$=30,000–21,440=Rs.8560$

Thus, Mr. D’souza incurred loss of $Rs.8560$