Question

Mrs. Sharma buys 85 shares (par value Rs.100) at Rs. 150 each. If the dividend is 6.5%, what will be her annual income. If she wants to increase her income by Rs. 260; how much more should she invest?

• A. 552.50, 6000
• B. 552.50, 5000
• C. 562.50, 7000
• D. 562.50, 8000

Answer 1

Answer: (A)

552.50, 6000

Par value of $85$ shares $=Rs.100\times 85=Rs.8,500$

Market value of $85$ shares $=Rs.150\times 85=Rs.12,750$

(i) Dividend$\left(\%\right)=6.5\%$

Dividend $=Annualincome=6.5\%ofRs.8,500=\frac{6.5}{100}\times 8,500=Rs.552.50$

(ii) Required income $=Rs.552.50+Rs.260=Rs.812.50$

If income is $Rs.552.50$, then investment is $Rs.12,750$

If income is $Rs.812.50$, then investment is $=\frac{12,750}{552.50}\times 812.50=Rs.18,750$

More investment required $=Rs.18,750–Rs.12,750=Rs.6,000$