Mr Sharma has 60 shares of nominal value of Rs 100 and he decides to sell them when they are at a premium of 60%. He invests the proceeds in shares of nominal value of Rs 50, quoted at 4% discount, paying 18% dividend annually. Calculate the number of shares he buys.
Answer & explanation
Correct answer: option 3
The correct answer is option (3) : 200
Nominal value of 1 share = ₹100
Mr Sharma sold the shares at 60% premium
S.P of 1 share = $₹100 + ₹60 = ₹160$
∴S.P of 60 shares $=₹160×60= ₹9600$
Market value of ₹50 share $=₹50\left(1-\frac{4}{100}\right)$ $= ₹48$
No. of shares purchased by Mr. Sharma $=\frac{₹9600}{₹48}$ $= 200$