Question

Mr. D ‘Souza purchased 200 shares of Rs. 50 at a premium of Rs. 100. He received a 50% dividend on the shares. After receiving the dividend he sold 100 shares at a discount of Rs. 10 and remaining shares were sold at a premium of Rs. 75. For each trade he paid the brokerage of Rs.20. Find whether Mr. D ‘Souza gained or incurred a loss? By how much ?

Answer 1

Hint: When the selling price is greater than the cost price of any article then profit occurs . When the cost price is greater than the selling price of any article then loss occurs.

Complete step-by-step answer:
Cost of each share=FV of each share+ Premium= Rs. 50+ Rs. 100=Rs. 150.
Number of share purchased= 200
The amount invested = Cost of each share \[ \times \]Total number of share purchase
 =Rs. 150\[ \times \]200= Rs.30,000
Selling price of each share at a discount of 10% (10% of Rs. 100)= Rs.50- Rs. 10= Rs. 40.
Amount received after selling 100 shares at discounted price:
=Discounted price of each share \[ \times \]Total number of share purchase=Rs.40\[ \times \]100= Rs.4000
Remaining 100 shares are sold at Rs. 125 each (Rs.50+Rs.75)
Selling price of 100 shares at premium price= Rs.125\[ \times \]100= Rs.12,500
For each trade he paid the brokerage = Rs.20
Total number of brokerage=3
Total amount he paid to brokerage=Rs.20\[ \times \]3=Rs.60.
Total amount Mr. D ‘Souza get on dividend= \[200\left( {\dfrac{{50}}{{100}} \times 50} \right) = Rs.4000\]
Net income of Mr. D ‘Souza= Total amount he received on selling 200 shares+ Total dividend he get- Total amount he paid to brokerage=Rs.12,500+Rs. 4,000+ Rs. 5000-Rs.60= Rs.21,440.
He incurred loss as the amount his net income is less than the amount he invested in buying 200 shares.
Total loss Mr. D ‘Souza incurred= Rs.30,000 - Rs.21,440= Rs.8560

Note: Student’s must be familiar with the concept of discount, selling price and cost price. In this FV is used which stands for future value of a share. If the selling price is more than the cost price, the difference between them is the profit incurred