Question 14 Marks
Usha sold 350 shares of Rs 150 each paying 6% dividend at Rs 120 and invested the proceeds in Rs 75 shares at par paying 8% dividend. Calculate the number of Rs 75 shares she bought and the change in her annual income.
Answer
View full question & answer→In first case:
No. of shares sold $=350$
Face value of each share $=$ Rs 150
Face value of 350 shares $=\operatorname{Rs}(150 \times 350)=\operatorname{Rs} 52,500$
Market value of each share $=$ Rs 120
Market value of 350 shares $=\operatorname{Rs}(120 \times 350)=\operatorname{Rs} 42,000$
Dividend (income) for 350 shares $=6 \%$ of Rs $52,500=$
Rs $\frac{6 \times 52500}{100}=$ Rs 3150
In second case:
Proceeds from selling 350 shares $=$ Rs 42,000
Face value of each share $=$ Rs 75
Market value of each share $=$ Rs 75
No. of shares bought $=\frac{42000}{75}=560$
Usha bought 560 shares of Rs 75 each.
Face value of 560 shares $=\operatorname{Rs}(75 \times 560)=$ Rs 42,000
Dividend (income) for 560 shares $=8 \%$ of Rs $42,000=$
$
\text { Rs } \frac{8 \times 42000}{100}=\text { Rs } 3360
$
Change in annual income $=\operatorname{Rs}(3,360-3,150)=\operatorname{Rs} 210$
No. of shares sold $=350$
Face value of each share $=$ Rs 150
Face value of 350 shares $=\operatorname{Rs}(150 \times 350)=\operatorname{Rs} 52,500$
Market value of each share $=$ Rs 120
Market value of 350 shares $=\operatorname{Rs}(120 \times 350)=\operatorname{Rs} 42,000$
Dividend (income) for 350 shares $=6 \%$ of Rs $52,500=$
Rs $\frac{6 \times 52500}{100}=$ Rs 3150
In second case:
Proceeds from selling 350 shares $=$ Rs 42,000
Face value of each share $=$ Rs 75
Market value of each share $=$ Rs 75
No. of shares bought $=\frac{42000}{75}=560$
Usha bought 560 shares of Rs 75 each.
Face value of 560 shares $=\operatorname{Rs}(75 \times 560)=$ Rs 42,000
Dividend (income) for 560 shares $=8 \%$ of Rs $42,000=$
$
\text { Rs } \frac{8 \times 42000}{100}=\text { Rs } 3360
$
Change in annual income $=\operatorname{Rs}(3,360-3,150)=\operatorname{Rs} 210$