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Question
A man invests Rs -10080 in 6% hundred- rupee shares at Rs. 112. Find his annual income. When the shares fall to Rs. 96 he sells out the shares and invests the proceeds in 10% ten-rupee shares at Rs. 8. Find the change in his annual income.
Solution
Investment = Rs. 10080
Face value of each share = Rs. 100
Market value of each share = Rs. 112
Rate of dividend = 6%
Total income for the year
= `(10080 xx 6)/(112)` = Rs. 540
No. of shares = `(10080)/(112)` = 90
Selling price of 90 shares at the rate of Rs. 96 each = 90 x 96 = Rs. 8640
Rate of dividend in new shares = 10%
Face value of each share = Rs. 10
and market value of each share = Rs. 8
No of shares = `(8640)/(8)` = 1080
Face value of 1080 shares
= 1080 x 10
= Rs. 10800
∴ Dividend = `"Rs."(10800 10)/(100)` = Rs. 1080
DIfference in income = Rs. 1080 - Rs. 540
= Rs. 540 more.
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