Question

Iii. Yangchen has Nu 120,000 which she wants to invest in Punjab National Bank shares with a face value of Nu 500 but the bank was selling at a premium of 15%. How many shares can she buy?

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Answer 1

To calculate the number of shares Yangchen can buy, we need to determine the total cost of the shares after applying the premium.

Given:

Amount available to invest (Nu) = 120,000

Face value of each share (Nu) = 500

Premium on the bank shares = 15%

Step 1: Calculate the cost per share after the premium is applied:

Cost per share = Face value + Premium

Cost per share = 500 + (15% of 500)

Cost per share = 500 + 0.15 * 500

Cost per share = 500 + 75

Cost per share = 575

Step 2: Calculate the number of shares Yangchen can buy:

Number of shares = Amount available to invest / Cost per share

Number of shares = 120,000 / 575

Number of shares ≈ 208.70 (rounded to the nearest whole number)

Since Yangchen cannot buy a fraction of a share, she can buy a maximum of 208 shares (rounded down from 208.70) with Nu 120,000 if each share has a face value of Nu 500 and is selling at a premium of 15%.