Share Price Scenario Analysis

This problem involves calculating potential savings in share trading after consecutive price drops. We need to determine the original price of the share and the price at which it was sold, then compare this to the price it would have been sold for on the previous day.

Let's break down the information given:

• The share price dropped by 10% from the previous day's closing price.
• The share price then dropped by another 8%. Crucially, this 8% drop is calculated based on the price *after* the first 10% drop (i.e., the price at the end of the previous day).
• The final selling price was ₹12,420.
• We need to find the difference between the selling price on the previous day and the final selling price (₹12,420).

Price Drop Calculations Explained

To solve this, we'll work backward from the final selling price. Let's assume the price of the share at the beginning of the first day (original price) was '$P$'.

1. Price after the first day's drop: The price decreased by 10%. The remaining value is 100% - 10% = 90% of the original price.

   Price = $P \times (1 - 0.10) = 0.90P$

   This '$0.90P$' represents the share price at the end of the previous day (before the second drop occurred).

2. Price after the second day's drop: The price fell by another 8% of the price at the end of the previous day ($0.90P$).

   The remaining value is 100% - 8% = 92% of the price at the end of the previous day.

   Final Selling Price = $(0.90P) \times (1 - 0.08) = 0.90P \times 0.92 = 0.828P$

Determining Sale Prices

We know the final selling price is ₹12,420. Using our calculation from the previous step:

$$0.828P = 12,420$$

Now, we can find the original price '$P$':

$$P = \frac{12,420}{0.828}$$

$$P = 15,000$$

So, the original price of the share was ₹15,000.

Next, let's find the price at the end of the previous day (after the first 10% drop):

Price on previous day = $0.90P = 0.90 \times 15,000 = 13,500$

The share price at the end of the previous day was ₹13,500.

Calculating Saved Amount

The person sold the shares for ₹12,420. Had they sold it on the previous day, they would have received ₹13,500.

The amount the person could have saved is the difference between the price on the previous day and the final selling price:

Amount Saved = Price on previous day - Final Selling Price

Amount Saved = $₹13,500 - ₹12,420$

Amount Saved = $₹1,080$

Therefore, the person could have saved ₹1,080 had they sold the shares on the previous day.