Question

Mr. sharma has $$60$$ shares of $$N.V. Rs 100$$ and sells them when they are at a premium of $$60\%$$. He invests the proceeds in shares of nominal value $$Rs 50$$. 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.

Solution

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 $$= \cfrac{9600}{48} = 200 \text{ shares} \; \left[ \text{Answer} \right]$$(iii) Nominal value of 200 shares $$= Rs. 50 \times 200 = Rs. 10000$$Dividend $$\% = 18 \%$$Dividend $$= 18 \% \text{ of } Rs. 10000 = \cfrac{18}{100} \times 10000 = Rs. 1800 \; \left[ \text{Answer} \right]$$Mathematics

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