#### Question

Vivek invests Rs 4,500 in 8%, Rs 10 shares at Rs 5. He sells the shares when the price rises to Rs 30, and invests the proceeds in 12% Rs 100 shares at Rs 125. Calculate :

(1) the sale proceeds

(2) the number of Rs 125 shares he buys.

(3) the change in his annual income from the dividend.

#### Solution

1 st case

Total investment = Rs 4,500

Market value of 1 share = Rs 15

∴ No of shares purchased = `4500/15 = 300` shares

Nominal value of 1 share = Rs 10

Nominal value of 300 shares = Rs 10 × 300= Rs 3,000

Dividend = 8% of Rs 3,000

`= 8/100 xx 3000 = "Rs" 240`

Sale price of 1 share = Rs 30

Total sale price= Rs 30 × 300= Rs 9,000

2) new market price of 1 share = Rs 125

∴ No of shares purchased = `(9000)/125` = 72 shares

3) New nominal value of 1 share= Rs 100

New nominal value of 72 shares = Rs 100 × 72 = Rs 7,200

Dividend% = 12%

New dividend = 12% of Rs 7,200

`= 12/100 xx "Rs" 7200 = "Rs" 864`

Change in annual income = Rs 864 – Rs 240 = Rs 624