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Question
Mr Lele sold 250 shares of Rs 75 each of 'IOCL' paying 8% of dividend at Rs 112. He invested the proceeds in buying Rs 125 shares of HPCL paying 8% of dividend available at Rs 140. Calculate the number of shares of HPCL that Mr Lele bought and the change in his annual income.
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Solution
In first case: No. of shares sold = 250
Face value of each share =Rs 75
Face value of 250 shares= Rs (75 x 250) =Rs 18,750
Market value of each share = Rs 112
Market value of250 shares= Rs (112 x 250) =Rs 28,000
Dividend (income) for 250 shares = 8 % of Rs 18,750 =
Rs `(8 xx 18750)/100` = Rs 1500
In second case:
Proceeds from selling 250 shares =Rs 28,000
Face value of each share =Rs 125
Market value of each share = Rs 140
No. of shares bought = `28000/140 = 200`
Mr Lele bought 200 shares of Rs 140 each.
Face value of 200 shares =Rs ( 125 x 200) =Rs 25,000
Dividend (income) for 200 shares = 8 % of Rs 25,000 =
Rs `(8 xx 25000)/100` = Rs 2000
Change in annual income= Rs (2,000 -1,500) =Rs 500
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