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Question
A man bought 360 ten-rupee shares paying 12% per annum. He sold them when the price rose to Rs. 21 and invested the proceeds in five-rupee shares paying `4(1)/(2)` % per annum at Rs. 3.5 per share. Find the annual change in his income.
Solution
No. of shares bought = 360
Face value of each share = Rs. 10
Rate of dividend = 12%
Total face value of 360 shares
= Rs. 10 x 360
= Rs. 3600
∴ Yearly dividend = `"Rs."(3600 xx 12)/(100)` = Rs. 432
On selling the share at Rs. 21, the amount received = Rs. 21 x 360 = Rs. 7560
Face value of new shares = Rs. 5.00
and market value = Rs. 3.5
Rate of dividend = `4(1)/(2)% = (9)/(2)`%
No. of share purchased
= `(7560)/(3.5) xx (7560 xx 10)/(35)` = 2160
Face value of 2160 shares = Rs. 5 x 2160
= Rs. 10800
∴ Dividend = `(10800 xx 9)/(100 xx 2)` = Rs. 486
Change in income = Rs. 486 - Rs. 432
= Rs. 54 gain.
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