A man invests Rs 100800 in 6% hundred-rupee shares at Rs 112. Find his annual income. When the shares fall to Rs 96 he sells out the shares and invests the proceeds in 10% ten-rupee shares at Rs 8, Find the change in his annual income.
Answer & explanation
Correct answer: option 3
The correct answer is option (3) : ₹540
Total investment $= ₹ 10080$
Market value of 1 share $=₹112$
∴ No. of shares bought $=\frac{₹10080}{₹112}=90$
Dividend on 1 share of $₹100= ₹\left(\frac{6}{100}×100\right) = ₹6$
∴ Annual Income $= ₹6× 90 = ₹540$
S.P of 1 share $= ₹96$
∴S.P of 90 shares $= ₹96×90= ₹8640$
He invested the proceeds in ₹10 shares at ₹8
∴ No. of 10 shares purchased $=\frac{₹8640}{₹8}$
$= 1080 $
Dividend on 1 share = 10% of $₹10= ₹1$
Dividend on 1080 share =$₹1080$
Change in annual income $=₹1080 - ₹540$
$= ₹540$