A man invested Rs. 26000 in 5% stock at 104. He sold the stock when the price rose to Rs. 120 and invested the sale proceeds in 6% stock. By doing this his income increased by Rs. 2500. At what price did he purchase the second stock?
Assuming that face value of the first stock = Rs.100 as it is not given in the question
Since it is a 5% stock, we can take the dividend per stock = Rs.5
Market Value of the first stock = Rs.104
Investment on the first stock = Rs.26000
Number of stocks purchases = $\dfrac{26000}{400}$ = 250
His total income from all these stocks = Rs.250 × 5 = Rs.1250
He sells each of this stock at Rs.120
ie, amount he earns = Rs.120 × 250 = Rs.30000
He invest this Rs.30000 in 6% stock [here also face value is not given and hence take it as Rs.100]
His new income = Rs.[1250 + 2500] = Rs.3750
ie, By Rs.30000 of investment , he earns an income of Rs.3750
To get an income of Rs.6, investment needed = $\dfrac{30000 \times 6}{3750} = Rs.48$%
This is the market value of the second stock=Rs 48