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ICSE Class 10 Answered

A man has some shares of RS100 par value paying 6% dividend. He sells half of these at a discount of 10% and invests the proceeds in 7% RS50 shares at a premium of Rs10. This transaction decreses his imcome from dividends by RS120. Calculate a) the number of shares before the transaction b) the number of shares he bought c) his initial annual income from shares
Asked by joydevbs | 14 Jan, 2019, 04:47: PM
answered-by-expert Expert Answer
Let the number of shares be x
Nominal value = Rs. 100
Dividend is 6%
Annual income = x × 100 × 6/100 = 6x
Annual income of half shares x/2 = 6x/2 = Rs. 3x
Selling price of shares at a discount of 10% hence selling price of a share is 100 - 10 = Rs. 90
x/2 × 90 = 45x
Investment is 45x 
Shares = 3/4x d%= 7%
Nominal Value = Rs. 50 
Market Value = Rs. 60
Amount Invetsed = 3/4x × 7/100 × 50 = 21/8x
Change in income 3x - 21/8x = Rs. 120
 a. x = shares = 320
 b. Shares sold = 160
 c. Initial income = 6 × 320 = Rs. 1920
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