Aman has 500, ₹ 100 shares of a company quoted at ₹ 120, paying a 10% dividend. When the share price rises to ₹ 200 each, he sells all his shares. He invests half of the sale proceeds in ₹ 10, 12% shares at ₹ 25, and the remaining sale proceeds in ₹ 400, 9% shares at ₹ 500.

Find his:

(a) sales proceeds.

(b) investment in ₹ 10, 12% shares at ₹ 25.

(c) original income.

(d) change in income.

(a) No. of shares Aman sells = 500

Aman sells the share when they rise to ₹ 200.

Sale proceeds = 500 × ₹ 200 = ₹ 1,00,000.

Hence, sale proceeds = ₹ 1,00,000.

(b) Given,

Aman invests half of the sale proceeds in ₹ 10, 12% shares at ₹ 25.

∴ Investment = $\dfrac{\text{Sale proceeds}}{2} = \dfrac{100000}{2}$ = ₹ 50,000.

Hence, investment in ₹ 10, 12% shares at ₹ 25 = ₹ 50,000.

(c) By formula,

Income = No. of shares × $\dfrac{\text{Rate of dividend}}{100}$ × Nominal value of share

= 500 × $\dfrac{10}{100}$ × 100

= ₹ 5,000.

Hence, original income = ₹ 5,000.

(d) Aman invests ₹ 50,000 in each of the new shares.

For 1st share :

N.V. = ₹ 10

Dividend = 12%

M.V. = ₹ 25

No. of shares bought = $\dfrac{50000}{25}$ = 2000.

Income = No. of shares × $\dfrac{\text{Rate of dividend}}{100}$ × Nominal value of share

= 2000 × $\dfrac{12}{100} \times 10$

= ₹ 2400.

For 2nd share :

N.V. = ₹ 400

Dividend = 9%

M.V. = ₹ 500

No. of shares bought = $\dfrac{50000}{500}$ = 100.

Income = No. of shares × $\dfrac{\text{Rate of dividend}}{100}$ × Nominal value of share

= 100 × $\dfrac{9}{100} \times 400$

= ₹ 3,600.

New income = ₹ 3,600 + ₹ 2,400 = ₹ 6000

Change in income = New income - Original income = ₹ 6,000 - ₹ 5,000 = ₹ 1,000.

Hence, change in income = ₹ 1,000 (increase).