Sachin invests ₹ 8,500 in 10%, ₹ 100 shares at ₹ 170. He sells the shares when the price of each share rises by ₹ 30. He invests the proceeds in 12%, ₹100 shares at ₹ 125. Find :

(i) the sale proceeds;

(ii) the number of ₹ 125 shares he buys;

(iii) the change in his annual income.

(i) Given,

Initially,

Investment = ₹ 8,500

Dividend rate = 10%

Face value = ₹ 100

Market value = ₹ 170

By formula,

$\text{No. of shares} = \dfrac{\text{Investment}}{\text{Market value of each share}} = \dfrac{8500}{170} = 50$

Given, shares are sold when price rises to ₹ 30,

Selling price = 170 + 30 = ₹ 200

By formula,

Sale proceeds = No. of shares × Sale Price

= 50 × 200

= ₹ 10,000.

Hence, sale proceeds = ₹ 10,000.

(ii) Given, the proceeds are invested in 12%, ₹ 100 shares at ₹ 125.

Investment = ₹ 10,000

Face value = ₹ 100

Market value = ₹ 125

Dividend rate = 12%

By formula,

No. of shares = $\dfrac{\text{ Investment }}{\text{ Market value of each share}} = \dfrac{10000}{125} = 80$

Hence, Sachin buys 80, ₹ 125 shares.

(iii) Annual income = No. of shares × Rate of div. × N.V. of 1 share

In first case,

Annual income = 50 × $\dfrac{10}{100} \times 100$ = ₹ 500.

In second case,

Annual income = 80 × $\dfrac{12}{100} \times 100$ = ₹ 960.

Change in income = 960 - 500 = ₹ 460.

Hence, the change in his annual income is ₹ 460.