Rana bought 500 shares of HCL at a rate that yielded him 20 % return on a 24%, Rs 350 share. Later on , the company issued a bonus share for every 10 shares held.
When the market price was Rs 480 he sold all the shares and invested the proceeds in buying Rs 300 shares of IBM paying a dividend of 27.5%.
The yield percent on his investment now was 25%. Find Rana's investment and change in his annual income
To find Rana's investment and change in his annual income, we need to break down the given information and calculate step by step.
1. Rana bought 500 shares of HCL at a rate that yielded him a 20% return on a 24% share.
To calculate the purchase cost of HCL shares, we can use the formula:
Purchase cost = Number of shares * Rate per share
Given that Rana bought 500 shares at a rate that yielded him a 20% return, we can calculate the purchase cost as follows:
Purchase cost = 500 * (24 / (1 + 20/100))
2. The company issued a bonus share for every 10 shares held.
Since Rana initially bought 500 shares of HCL, he would receive a bonus of (500 / 10) = 50 shares.
Therefore, now Rana's total number of shares would be 500 + 50 = 550.
3. The market price of HCL shares when Rana sold them was Rs 480.
To calculate the selling price of the HCL shares, we can use the formula:
Selling price = Number of shares * Market price per share
Given that Rana had 550 shares and the market price was Rs 480, we can calculate the selling price as follows:
Selling price = 550 * 480
4. Rana invested the proceeds from selling the HCL shares in buying Rs 300 shares of IBM paying a dividend of 27.5%.
To calculate the number of IBM shares Rana bought, we can use the formula:
Number of IBM shares = Proceeds from selling HCL shares / Rate per IBM share
Given that Rana sold his HCL shares and the proceeds were used to purchase IBM shares at a dividend rate of 27.5%, we can calculate the number of IBM shares as follows:
Number of IBM shares = Selling price of HCL shares / (300 * (1 + 27.5/100))
5. The yield percent on Rana's investment in IBM is 25%.
To calculate the yield percentage on Rana's investment in IBM, we can use the formula:
Yield percent = Annual income / Total investment * 100
Given that the yield percent is 25%, we can rewrite the formula as follows:
Annual income = Yield percent * Total investment / 100
Before calculating the change in annual income, we need to find Rana's total investment in IBM by multiplying the number of shares by the rate per share.
Finally, to calculate the change in annual income, subtract the initial annual income from the current annual income.
I hope the explanation above helps you understand the steps to find Rana's investment and change in his annual income. Let me know if there's anything else I can assist you with!