Mr. Ravi invests Rs 80000 in 10% Rs 100 shares at 25% premium. Find the annual income if the income-tax is deducted at the rate of 20%. Later on, he sells half the shares at Rs 140 and invests the sale value in 15% Rs 10 shares available at 20% discount. Find his new annual income, if the income tax is deducted at the same rate.

₹9280

The correct answer is option (4): ₹9280

Total investment $=₹80000$

Market price of 1 share of $₹100=₹100\left(1+\frac{25}{100}\right)$ $=₹125$

No. of shares bought $=\frac{₹80000}{₹125}=640$

Dividend received on 1 share $=₹\left(\frac{10}{100}×100\right)$ $= ₹10$

Dividend received on 640 share $=₹(10×640)$ $= ₹6400$

Income tax deducted = 20% of ₹6400

$=\frac{20}{100}×6400$ $=₹1280$

∴ Mr. Ravi's annual income $= ₹6400 - ₹ 1280 $ $= ₹5120$

Selling price of half shares i.e  320 @ 140 each $=₹(140×320)=₹44800$

Ravi invested the sale proceeds in ₹ 10shares at 20% discount

Market price of 1 share of $₹10 = 10 \left(1-\frac{20}{100}\right)$ $=₹8$

∴ No. of 8 shares purchased $=\frac{₹44800}{₹8}=5600$

Dividend on 1 share of ₹8 $=₹\left(\frac{15}{100}×10\right)$ $=₹1.5$

5600 shares of $₹8 = ₹(1.5×5600)$ $= ₹8400$

Dividend on 320 shares each of market value of $₹125 = ₹ (10×320)$ $=₹3200$

∴ Total dividend received $= ₹ 8400+ ₹3200$ $= ₹ 11600$

Now, income tax deducted = 20% of ₹ 11600 $= ₹ 2320 $

∴ Now annual income $= ₹ 11600- ₹ 2320$ $=₹9280$