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12500 shares, of par value $ 20 each, are purchased from Ram by Mohan at a price of $ 25 each. Find out the amount required to purchase the shares. If Mohan further sells the shares at a premium of $ 11 each, then find out his gain in the transaction.
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- $ 75000
- $ 85000
- $ 70000
- $ 65000
Correct Option: A
Given :- Face value of each share = $ 20
Market value of a share = $ 25
Number of shares = 12500
∴ Market value of 12500 shares = Number of shares x Market value of a share
Market value of 12500 shares = $ (25 × 12500) = $ 312500
Thus, the amount required to purchase 12500 shares = $ 312500
Then, Mohan sells these shares at a premium of $ 11 each.
∴ New market rate per shares = Face value of each share + premium
New market rate per shares = $ (20 + 11) = $ 31
∴ Selling price of these shares = New market rate per shares x Number of shares
Selling price of these shares = $ (31 × 12500) = $ 387500
∴ Gain = S.P. - C.P. = $ (387500 - 312500) = $ 75000.
