Question

Ms. Kaur invested ₹ 8,000 in buying ₹ 100 shares of a company paying a 6% dividend at ₹ 80. After a year, she sold these shares at ₹ 75 each and invested the proceeds, including the dividend received during the first year, in buying ₹ 20 shares, paying a 15% dividend at ₹ 27 each. Find the:

1. dividend received by her during the first year. 
2. number of shares purchased by her using the total proceeds.

Answer 1

a. Given,

For initial investment,

Investment = ₹ 8,000

Face Value = ₹ 100

Market Value = ₹ 80

Dividend Rate = 6%

By formula,

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

= `8000/80`

= 100

By formula,

Dividend for the first year = No. of shares × Rate of dividend × N.V. of 1 share

= `100 xx 6/100 xx 100`

= ₹ 600

b. Given,

Number of shares sold = 100

Selling price per share = ₹ 75

Proceeds from sale = Number of shares × selling price

= 100 × 75

= ₹ 7500

Total proceeds = Proceeds from sale + Dividend received

= 7500 + 600

= ₹ 8100

Total investment = ₹ 8100

Market value per share = ₹ 27

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

= `8100/27`

= 300