Question

A man invests ₹ 50,000 of his savings in 12%, ₹ 100 shares at ₹ 125 another ₹ 60,000 in 15%, ₹ 100 shares at ₹ 120 and remainder 18% ₹ 100 shares at ₹ 140. If his annual income is ₹ 21,300 find:

1. the rate of return on the whole.
2. the investment in third company.

Answer 1

(i) Given,

1st Company = 12%, ₹ 100 shares at ₹ 125

Investment = ₹ 50,000

2nd Company = 15%, ₹ 100 shares at ₹ 120

Investment = ₹ 60,000

3rd Company = 18%, ₹ 100 shares at ₹ 140

Investment = Remaining

Total annual income = ₹ 21,300

For 1st Company:

Number of shares = `"Total Investment"/"Market value of each share"`

= `50000/125`

= 400

Annual income = No. of shares × Rate of div. × N.V. of 1 share

= `400 xx 12/100 xx 100`

= 400 × 12

= ₹ 4800

For 2nd company:

Number of shares = `"Total Investment"/"Market value of each share"`

= `60000/120`

= ₹ 500

Annual income = No. of shares × Rate of div. × N.V. of 1 share

= `500 xx 15/100 xx 100`

= 500 × 15

= ₹ 7500

Income from first two companies = ₹ 4,800 + ₹ 7,500

= ₹ 12,300

Total annual income = ₹ 21,300

Income from 3rd Company = ₹ 21,300 − ₹ 12,300

= ₹ 9,000

Annual income = No. of shares × Rate of div. × N.V. of 1 share

9000 = No. of shares × `18/100 xx 100`

9000 = No. of shares × 18

No. of shares = `9000/18`

= 500

Investment in 3rd company = Number of shares × Market price

= 500 × 140

= ₹ 70,000

Total Investment = ₹ 50,000 + ₹ 60,000 + ₹ 70,000

= ₹ 1,80,000

Rate of Return = `"Total income"/"Total investment" ×100`

= `21300/180000 xx 100`

= 11.83%

Hence, rate of return = 11.83%.

(ii) Investment in 3rd company = Number of shares × Market price

= 500 × 140

= ₹ 70,000

Hence, investment in third company = ₹ 70,000.