Mr. Sharma has 60 shares of N.V. `100rs` and sells them when they are a premium of `60%` . He invests the proceeds in shares of nominal value `50rs`, quoted at `4%` discount, and paying `18%` dividend annually. Calculate
(i) the sale proceeds
(ii) the number of shares he buys and
(iii) his annual dividend from the shares

Answer

Let's solve the problem step by step.

### Given:
- Mr. Sharma has **60 shares** of nominal value **₹100**.
- He sells them at a **premium of 60%**.
- He invests the proceeds in shares of nominal value **₹50**, quoted at a **4% discount**, paying **18% dividend annually**.

### (i) Calculate the Sale Proceeds

1. **Calculate the Market Value of One Share**:
- The nominal value of one share = ₹100.
- Premium = 60% of ₹100 = ₹60.
- Market value of one share = Nominal value + Premium = ₹100 + ₹60 = ₹160.

2. **Calculate the Sale Proceeds**:
- Sale proceeds = Market value of one share × Number of shares.
- Sale proceeds = ₹160 × 60 = ₹9600.

### (ii) Calculate the Number of Shares He Buys

1. **Calculate the Market Value of One New Share**:
- Nominal value of new shares = ₹50.
- Discount = 4% of ₹50 = ₹2.
- Market value of one new share = Nominal value - Discount = ₹50 - ₹2 = ₹48.

2. **Calculate the Number of Shares He Buys**:
- Number of shares bought = Sale proceeds / Market value of one new share.
- Number of shares bought = ₹9600 / ₹48 = 200 shares.

### (iii) Calculate His Annual Dividend from the Shares

1. **Calculate the Nominal Value of the New Shares**:
- Nominal value of 200 shares = Number of shares × Nominal value of one share.
- Nominal value of 200 shares = 200 × ₹50 = ₹10,000.

2. **Calculate the Annual Dividend**:
- Dividend percentage = 18%.
- Annual dividend = (Dividend percentage / 100) × Nominal value of shares.
- Annual dividend = (18 / 100) × ₹10,000 = ₹1800.

### Summary of Answers:
- (i) Sale Proceeds = **₹9600**.
- (ii) Number of Shares Bought = **200 shares**.
- (iii) Annual Dividend = **₹1800**.

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