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.

Answer 1

1^st 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

2^nd case

Total investment in 2^nd 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%