Ashish bought 4,500, ₹ 10 shares paying 12% per annum. He sold them when the price rose to ₹ 23 and invested proceeds in ₹ 25 shares paying 10% per annum at ₹ 18. Find the change in his annual income.

Given,

Initial Investment,

Number of shares = 4,500

Face Value = ₹ 10

Dividend Rate = 12%

By formula,

Initial Annual Income = No. of shares × Rate of div. × N.V. of 1 share

= $4500 \times \dfrac{12}{100} \times 10$

= ₹ 5,400.

Given,

Ashish sold the shares when the price rose to ₹ 23.

Selling Price per share = ₹ 23

Sale Amount = No.of Shares × S.P.

= 4500 × ₹ 23

= ₹ 1,03,500

For the new Investment :

Face Value = ₹ 25

Market Value = ₹ 18

Dividend Rate = 10%

By formula,

$\text{Number of shares} = \dfrac{\text{Investment}}{\text{ Market value of each share}} \\[1em] = \dfrac{103500}{18} \\[1em] = 5750. \\[1em] \text{New Annual Income} = \text{No. of shares} \times \text{Rate of div.} \times \text{N.V. of 1 share}\\[1em] = 5750 \times \dfrac{10}{100} \times 25 \\[1em] = ₹ 14,375.$

Change in Income = New Annual Income - Initial Annual Income

= ₹ 14,375 - ₹ 5,400 = ₹ 8,975.

Hence, Ashish's annual income increased by ₹ 8,975.