Question

Peter invests Rs. 5,625 in a company paying 7% per annum when a share of Rs. 10 stands from Rs. 12.50. Find Peter’s income from this investment.
If he sells 60% of these shares from Rs. 10 each, find his gain or loss in this transaction.

Answer 1

i) Total investment = Rs. 5,625
Nominal value of 1 share = Rs. 10

Market value of 1 share = Rs. 12.50
∴ No of shares purchased =`(5,625)/12.50` = 450 shares
 
Nominal value of 450 shares = Rs. 10 × 450 = Rs. 4,500
Dividend% = 7%
Dividend = 7% of Rs. 4,500

= `7 /100`×4,500 = 𝑅s. 315

(ii)
No. of shares sold = 60% of 450 = 270
Sale price of 270 shares = Rs10 × 270 = Rs. 2,700

Purchase price of 270 shares= Rs12.50 × 70 = Rs. 3,375
His loss = Rs. 3,375 – Rs. 2,700 = Rs. 675 Ans.