Question

The board of directors of a company decided to issue minimum number of equity shares of Rs. 10 each at 20% discount to redeem 4,500 preference shares of Rs. 100 each. If the maximum amount of divisible profit is Rs. 2,50,558. Calculate the number of equity shares to be issued. How many shares will be issued if they are issued in multiple of 50?

• A. 24,931 & 24,950
• B. 24,931 & 24,900
• C. 24,932 & 24,950
• D. 24,932 & 24,930

Answer 1

The correct option is A 24,931 & 24,950

Here, the divisible profit is Rs 2,50,558 and redemption price of 4500 shares is Rs 100 each i.e Rs 4,50,000. Now the balance left for equity shares is Rs 4,50,000-Rs 2,50,558 i.e. 1,99,442. Equity shares are issued at Rs 10 per share with 20% discount i.e Rs 10- Rs 2 i.e. Rs 8 per share which means number of shares to be issued will be Rs 1,99,442/Rs 8 i.e. 24,931 shares. If shares are issued in multiple of 50, then 24,950 shares will be issued as 24931 is minimum amount of shares and it cannot be 24,900.