Question

Mr. sharma has $60$ shares of $N.V.Rs100$ and sells them when they are at a premium of $60\%$. He invests the proceeds in shares of nominal value $Rs50$. quoted at $4\%$ discount, and paying $18\%$ dividend annually. calculate:
(i) the sale proceeds:
(ii) the numbers of share he buys: and
(iii) his annual dividend from the shares.

Answer 1

Solution:-

(i) Nominal value of 1 share $=Rs.100$

Nominal value of 60 shares $=60\times 100=Rs.6000$

Market value of 1 share $=Rs.100+60\%\text{of}Rs.100=100+60=Rs.160$

Market value of 60 shares $=160\times 60=Rs.9600\left[\text{Answer}\right]$

(ii) Nominal value of 1 share $=Rs.50$

Market value of 1 shares $=Rs.50-4\%\text{of}Rs.50=50-2=Rs.48$

No. of shares purchased $=\frac{9600}{48}=200\text{shares}\left[\text{Answer}\right]$

(iii) Nominal value of 200 shares $=Rs.50\times 200=Rs.10000$

Dividend $\%=18\%$

Dividend $=18\%\text{of}Rs.10000=\frac{18}{100}\times 10000=Rs.1800\left[\text{Answer}\right]$