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%, Rs 350 share.
- The investment in HCL shares can be calculated by multiplying the number of shares (500) by the cost per share (Rs 350): 500 * 350 = Rs 175,000.
- The 20% return on investment means he gained 20% of the invested amount: 20/100 * 175,000 = Rs 35,000.
2. The company issued a bonus share for every 10 shares held.
- Since Rana held 500 shares, he received a bonus of 500/10 = 50 shares.
- Now he has a total of 500 + 50 = 550 shares.
3. When the market price was Rs 480, Rana sold all the shares.
- The total amount received from selling the 550 shares is 550 * 480 = Rs 264,000.
4. Rana invested the proceeds in buying Rs 300 shares of IBM paying a dividend of 27.5%.
- The investment in IBM shares can be calculated by dividing the total amount received (Rs 264,000) by the cost per share (Rs 300): 264,000 / 300 = 880 shares.
- The annual income from the dividend can be calculated by multiplying the number of shares (880) by the dividend rate (27.5/100): 880 * (27.5/100) = Rs 242.
5. The yield percent on Rana's investment now is 25%.
- The yield percent can be calculated by dividing the annual income from the dividend (Rs 242) by the investment amount (Rs 264,000) and multiplying by 100: (242 / 264,000) * 100 = 0.092 * 100 = 9.2%.
Therefore, Rana's investment is Rs 264,000, and there is a change in his annual income of Rs 242.