Question

19. Rohit invested * 9.600 on 100 shares a
20 premium paying 8% dividend. Rohit sold
the shares when the price rose to 160. He
invested the proceeds (excluding dividend) in
10% 50 shares at 7 40. Find the :
(i) original number of shares.
(ii) sale proceeds
(iii) new number of shares.
(iv) change in the two dividends. 120151​

Answer 1

Step-by-step explanation:

Rohit invested `9600 on `100 shares at `20 premium paying 8% dividend. Rohit

sold the shares when the price rose to `160. He invested the proceeds (excluding dividend) in 10%

`50 shares at `40. Find the :

(i) original number of shares. (ii) sale proceeds.

(iii) new number of shares. (iv) change in the two dividends. (2015)

Solution. (i) Rohit invested ` 9600 on ` 100 shares at 20% premium paying 8% dividend.

Market value of one share = ` 20

100

1

      + × 100 = ` 120.

∴ The original number of shares purchased = investment

market value of one share

= 9600

120

`

`

= 80.

(ii) Selling price of one share = ` 160,

∴ selling price of 80 shares = ` (160 × 80) = ` 12800.

Hence, Rohit’s sale proceeds = ` 12800.

(iii) Market value of new share = ` 40, investment = ` 12800.

∴ The number of new shares purchased = investment

market value of one share

= 12800

40

`

`

= 320.

(iv) Annual income (dividend) from original shares

= number of shares × rate of dividend × face value of one

share

= 80 × 8

100

× ` 100 = ` 640.

Annual income (dividend) from new shares

= number of shares × rate of dividend × face value of one share

= 320 × 10

100

× ` 50 = ` 1600

∴ Change in two dividends = ` 1600 – ` 640 = ` 960 (increase)

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