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Question
Ramesh had Rs 100 shares of 'Bihar Steel' paying 8% dividend. He sold them at a market price of Rs 130 and invested the proceeds in buying Rs 50 shares of 'Jindal steel' available at Rs 75 and paying 12% dividend. He thus increased the annual income by Rs 360. How many shares did Ramesh sell?
Solution
For shares of 'Bihar Steel':
Let x be the no. of shares sold by Ramesh.
Nominal value of each share =Rs 100
Face value of x shares = Rs 100x
Market value of each share = Rs 130
Market value of x shares = Rs 130x = proceeds from selling
Dividend = 8 % of Rs 100 x = `8/100 xx "Rs" 100 x` = Rs 8 x .............(i)
For shares of 'Jindal Steel':
Market value of each share = Rs 75
Number of shares bought = proceeds from selling 'Bihar steel' I market value of 'Jindal steel'
=`(130 x )/75`
Nominal value of each share =Rs 50
Face value of `(130 x)/75` shares = Rs `50 xx (130 x)/75` = Rs 86.667 x
Dividend = 12 % of Rs 86.667 x = Rs `(12 xx 86.667 x)/100` = Rs 10.40 x .........(ii)
Increase in annual income =Rs 360 =subtraction of (i) from (ii)
Rs ( 10.40x - 8x) = Rs 360
⇒ 2.4x = Rs 360
⇒ x = 150
Therefore, Ramesh sold 150 shares
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