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Mrs. P. Chandra Invested Rs. 19,200 in 15% Rs. 100 Shares at 20% Discount. After a Year, She Sold These Shares at Rs. 90 Each and Invested the Proceeds (Including Her Dividend) in 20%, Rs. 50 Shares - ICSE Class 10 - Mathematics

Question

Mrs. P. Chandra invested Rs. 19,200 in 15% Rs. 100 shares at 20% discount. After a year, she sold these shares at Rs. 90 each and invested the proceeds (including her dividend) in 20%, Rs. 50 shares at Rs. 42. Find:
(i) The dividend for the first year.
(ii) Her annual income in the second year.
(iii) The percentage change in her 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. 80
Total investment = Rs. 19,200
∴ No of shares purchased = (19,200)/80 = 240  shares
Nominal value of 240 shares = Rs. 100 × 240 = Rs. 24,000
Dividend% = 15%
Dividend = 15% of Rs. 24,000

= 15 /100×Rs 24,000 = Rs 3,600

She sold 240 shares in = Rs. 90 × 240 = Rs. 21,600

2nd case

Total investment in 2nd year = Rs. 21,600 + Rs. 3,600
= Rs. 25,200
Nominal value of 1 share = Rs. 50

Market value of 1 share = Rs. 42
∴ No of shares purchased = (25,200)/42 = 600 shares
Nominal value of 600 shares = Rs. 50 × 600 = Rs. 30,000
Dividend% = 20%
Dividend = 20% of Rs. 30,000

= 20/100×"Rs"  30,000 = 𝑅s. 6,000

Annual change in income = Rs. 6,000 – Rs. 3,600

= Rs. 2,400
The percentage change in her return on her original investment

= (2,400) /(19,200) ×100% = 12.5%

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Solution Mrs. P. Chandra Invested Rs. 19,200 in 15% Rs. 100 Shares at 20% Discount. After a Year, She Sold These Shares at Rs. 90 Each and Invested the Proceeds (Including Her Dividend) in 20%, Rs. 50 Shares Concept: Shares and Dividends.
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