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Question
Usha sold 350 shares of Rs 150 each paying 6% dividend at Rs 120 and invested the proceeds in Rs 75 shares at par paying 8% dividend. Calculate the number of Rs 75 shares she bought and the change in her annual income.
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Solution
In first case:
No. of shares sold = 350
Face value of each share =Rs 150
Face value of 350 shares =Rs ( 150 x 350) =Rs 52,500
Market value of each share = Rs 120
Market value of 350 shares =Rs ( 120 x 350) =Rs 42,000
Dividend (income) for 350 shares = 6 % of Rs 52,500 =
Rs `(6 xx 52500)/100` = Rs 3150
In second case:
Proceeds from selling 350 shares =Rs 42,000
Face value of each share =Rs 75
Market value of each share = Rs 75
No. of shares bought = `42000/75 = 560`
Usha bought 560 shares of Rs 75 each.
Face value of 560 shares =Rs (75 x 560) =Rs 42,000
Dividend (income) for 560 shares = 8 % of Rs 42,000 =
Rs `(8 xx 42000)/100` = Rs 3360
Change in annual income =Rs (3,360 - 3,150) =Rs 210
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