Sachin invests ₹8500 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) Total Investment = ₹8500

Market Value per share = ₹170

∴ No. of shares

$= \dfrac{\text{Total Investment}}{\text{MV per share}} \\[0.7em] = \dfrac{8500}{170} \\[0.5em] = \bold{50}$

Selling price of 1 share = ₹170 + ₹30 = ₹200
∴ Selling price of 50 shares = ₹(50 x 200) = ₹10000

Hence, the sale proceeds = ₹10000

(ii) Market Value of new shares = ₹125

∴ No. of new shares

$= \dfrac{\text{Total Investment}}{\text{MV per share}} \\[0.7em] = \dfrac{10000}{125} \\[0.5em] = \bold{80}$

Hence, the number of ₹125 shares he buys = 80

(iii) The change in his annual income:

Annual Dividend from 10% ₹100 shares at ₹170
= No. of shares x Rate of Dividend x Nominal Value per share

$= 50 \times \dfrac{10}{100} \times 100 \\[0.5em] = \bold{₹500}$

Annual Dividend from 12% ₹100 shares at ₹125
= No. of shares x Rate of Dividend x Nominal Value per share

$= 80 \times \dfrac{12}{100} \times 100 \\[0.5em] = \bold{₹960}$

∴ Change in Annual Income = ₹960 - ₹500 = ₹460

Annual Income increased by ₹460