Question

Mr. Ram Gopal invested Rs 8,000 in $7\%$ Rs 100 shares at Rs 80. After a year, he sold these shares at Rs 75 each and invested the proceeds (including his dividend) in $18\%$, Rs 25 shares at Rs 41. Find:
(i) his dividend for the first year.
(ii) his annual income in the second year.
(iii) the percentage increase in his return on his original investment.
[4 MARKS]

Answer 1

part(i): 1 Mark
part(ii): 2 Marks
part(iii): 1 Mark

(i) Number of shares bought by Mr. Ram Gopal
$=\frac{8000}{80}=100$
Total face value of 100 shres = Rs 100 $\times$ 100 = Rs 10,000
Dividend = $7\%$ of Rs 10,000 = $\frac{7}{100}\times$ 10,000 = Rs 700
(ii) Amount received on selling 100 shares for Rs 75 each = Rs 100 $\times$ 75 = Rs 7500
Proceeds (including his dividend) = Rs 7500 + Rs 700 = Rs 8200
Number of shares of Rs 25 at Rs 41 = $\frac{8200}{41}$ = 200
Total face value of 200 shares = Rs 25 $\times$ 200 = Rs 5000
Dividend = $18\%$ of Rs 5000 = $Rs\frac{18}{100}\times 5000$ = Rs 900
(iii) Increase in income = Rs 900 - Rs 700 = Rs 200
$\therefore \%$Increase in the return = $\frac{200}{8000}\times 100=2.5\%$