Question

Salman buys $50$ shares of face value Rs. $100$ available at Rs. $132$.
(i) What is his investment?
(ii) If the dividend is $7.5\%$, what will be his annual income?
(iii) If he wants to increase his annual income by Rs. $150$, how many extra shares should he buy?

Answer 1

Number of shares$=50$
Face value of each share$=Rs.100$
Market value of each share$=Rs.132$
Total face value$=Rs.100\times 50$
$=Rs.5,000$
(i) Total investment$=Rs.132\times 50$
$=Rs.6,600$
(ii) Rate of dividend $=7.5\%$
Annual income$=Rs.\frac{5,000\times 7.5}{100}$
$=Rs.375$
(iii) Let extra share should he buy be $x$.
then total number of shares$=50+x$
Total face value$=Rs.100\times (50+x)$
$\therefore$ Annual income$=Rs.\frac{100\times (50+x)\times 7.5}{100}$
$=(50+x)\times 7.5$
$\therefore (50+x)\times 7.5=375+150$
$50+x=\frac{525}{7.5}=70$
$x=70-50=20$
Hence, the extra shares should be buy$=20$.