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Govind Invested Rs. 19,200 in 15% Rs 100 Shares at 20% Premium. After a Year, He Sold These Shares at Rs. 140 Each and Invested the Proceeds (Including His Dividend) in 20%, Rs. 20 Shares at Rs. 16. - ICSE Class 10 - Mathematics

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Question

Govind invested Rs. 19,200 in 15% Rs 100 shares at 20% premium. After a year, he sold these shares at Rs. 140 each and invested the proceeds (including his dividend) in 20%, Rs. 20 shares at Rs. 16. Find:

i) The dividend for the first year.
(ii) Her annual income in the second year.
(iii) The percentage change in his return on her original investment.

Solution

1st case
Nominal value of 1 share = Rs. 100
Market value of 1 share = Rs. 100 + 20% of Rs. 100
= Rs. 100 + Rs. 20 = Rs. 120
Total investment = Rs. 19,200
∴ No of shares purchased = `(19,200) /120`= 160 shares
Nominal value of 160 shares= Rs100 x 160= Rs. 16,000
Dividend% = 15%
Dividend = 15% of Rs. 16,000

= `15/100`×16,000 = Rs. 2,400

He sold 160 shares in = Rs. 140 × 160 = Rs. 22,400

2nd case
Total investment in 2nd year = Rs. 22,400 + Rs. 2,400
= Rs. 24,800
Nominal value of 1 share = Rs. 20

Market value of 1 share = Rs. 16
∴ No of shares purchased = `(24,800)/16` = 1550 shares
 Nominal value of 1,550 shares = Rs. 20 × 1550 = Rs. 31,000
Dividend% = 20%
Dividend = 20% of Rs. 31,000

= `20/100`×31,000 = 𝑅s. 6,200

Annual change in income = Rs. 6,200 – Rs. 2,400 = Rs. 3,800
The percentage change in his return on his original investment = `(3,800)/(19,200)×100% = 475 /24 % = 19 19/24%`

  Is there an error in this question or solution?

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Solution Govind Invested Rs. 19,200 in 15% Rs 100 Shares at 20% Premium. After a Year, He Sold These Shares at Rs. 140 Each and Invested the Proceeds (Including His Dividend) in 20%, Rs. 20 Shares at Rs. 16. Concept: Shares and Dividends.
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