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
Answers
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