Question

Vivek invests Rs 4500 in 8%, Rs 10 shares at Rs 15. He sells the shares when the price rises to Rs 30, and invests the proceeds in 12% Rs 100 shares at Rs 125. Calculate :
(i) The sale proceeds
(ii) The number of Rs 125 shares he buys
(iii) The change in his annual income form dividend
[4 MARKS]

Answer 1

part (i): 1 Mark
part (ii): 1 Mark
part (iii): 2 Marks

Number of shares $=\frac{Investment}{Marketvalue}$
$=\frac{4500}{15}=300$
(i) Sale proceeds = $Rs(300\times 30)=Rs9000$
(ii) Number of Rs 125 shares he buys
$=\frac{9000}{125}=72$
(iii) Original income = $Rs(\frac{8}{100}\times 10\times 300)$
$=Rs240$
New income = $\frac{12}{100}\times 100\times 72=Rs864$
$\therefore$ Change in income = Rs(864 - 240)
= Rs 624