Question

Mr Gupta invested Rs. 8000 8% Rs. 100 shares selling at Rs. 80. After a year, he sold his shares at Rs. 75 each and invested the proceeds in Rs. 100 shares selling at Rs. 90 with a dividend of 12%. Calculate
i)his income from first investment
ii)his income from second investment,and
iii)the increase percentage return on his original investment.

Answer 1

(i) His income from first investment is 8300 - 8000 = 300 Rs.

(ii) his income from second investment =  1,104 Rs.

(iii) the increase percentage return on his original investment = 3.75%

Step-by-step explanation:

Mr. Gupta invested in shares =  Rs. 8,000

Market price of the share = Rs. 80

Number of shares purchased = $\frac{8000}{80}=100$  Shares

Dividend 8% on face value = 8% of 100 × 100

                                             = 0.08 × 100 × 100

                                             = 800 Rs.

He sold his shares at Rs. 75

sales proceeds  = selling price + dividend

                           = (75 × 100) = 7500 + 800

                           = 8300 Rs.

On his second investment Market price = 90 Rs.

Number of shares purchased = $\frac{8300}{90}$  = 92.22 ≈ 92 shares

Dividend 12% on second purchase = $\frac{12\times 92\times 100}{100}$

                                                          = 1,104 Rs.

(i) His income from first investment is 8300 - 8000 = 300 Rs.

(ii) his income from second investment =  1,104 Rs.

(iii) the increase percentage return on his original investment

=  $\frac{income}{investment}\times 100$

=  $\frac{300}{8000}\times 100$

= 3.75%

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