Question

A man sold some ₹100 shares paying 10% dividend at a discount of 25% and invested the proceeds ₹100 share price 16% dividend quoted ₹80 and thus increase his income by ₹200 find the number of shares sold by him

Answer 1

Answer:

number of shares sold by him is 40

Step-by-step explanation:

Let number of shares sold be s

Nominal value = 100

Rate of dividend = 10%

Hence

Annual income(A) = Rate of dividend x nominal value x number of shares

=> A = 10/100   x  100 x s = 10s.....................eq1

As each share is sold at a discount of 25%

selling price of one share = Rs 75

selling price of s number of shares = Rs 75s

Given that

nominal value = 100

Market value = 80

rate of dividend = 16 %

Number of shares bought = selling price of old shares/market value

= 75s/80

Hence new annual income (B)

B = Rate of dividend x nominal value x number of shares

=> B = 16/100  x 100 x 75s/80

=> B = 15s

Given that his annual income increases by Rs 200

=> 15s - 10s = 200

=> 5s = 200

=> s = 40

Hence number of shares sold by him is 40