Question

Sachin invests Rs. 8500 in 10%, Rs 100 shares at Rs. 170. He sells the shares when the price of each share rises by Rs. 30. He invests the proceeds in 12% Rs. 100 shares at Rs. 125. Find:

1. The sale proceeds.
2. The number of Rs. 125 shares he buys.
3. The change in his annual income.

Answer 1

Given:

Sachin initially invests ₹ 8500 in 10% ₹ 100 shares at ₹ 170

Price rises by ₹ 30 → new price = ₹ 170 + ₹ 30 = ₹ 200

He reinvests the proceeds in 12% ₹ 100 shares at ₹ 125

Number of shares `= 8500/170`

= 50 shares

Selling price per share = ₹ 200

⇒ Total sale proceeds = 50 × 200

= ₹ 10,000

Number of shares = `10000/125`

= 80 shares

Old shares:

Dividend per share = 10% of ₹ 100

= ₹ 10

Total = 50 × 10

= ₹ 500

New shares:

Dividend per share = 12% of ₹ 100

= ₹ 12

Total = 80 × 12

= ₹ 960

Change = ₹ 960 − ₹ 500

= ₹ 460