Question

Rohit invested Rs 9,600 on Rs 100 shares at Rs 20 premium paying 8% dividend. Rohit sold the shares when the price rose to Rs 160. He invested the proceeds (excluding dividend) in 10% Rs 50 shares at Rs 40. Find the :
(i) Original number of shares
(ii) Sale proceeds
(iii) New number of shares
(iv) Change in the two dividends.
[4 MARKS]

Answer 1

Each subpart: 1 Mark each

Investment of Rohit = Rs 9600
Face value = Rs 100
Premium = Rs 20
Market value = Rs 120
Rate of dividend = 8%
(i) No. of shares $=\frac{9600}{120}$
= 80
(ii) Rohit sold shares at rate of Rs 160
Total sale = $80\times 160$
= Rs 12,800
New investment = Rs 12800
Face value = Rs 50
Market value = Rs 40
Rate of dividend = 10%
(iii) New no of shares = $\frac{12800}{40}$
= 320
(iv) Original income = $8\%of100\times 80$
$=\frac{8}{100}\times 100\times 80$
= Rs 640
New income $=10\%of50\times 320$
$=\frac{10}{100}\times 50\times 320$
= Rs 1600
Change in dividend = 1600 - 640
= Rs 960