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When we invest in shares, it is important to know the return on investment. Observe the following example.

Ex. (1) Shriyash purchased a share of FV Rs. 100 for MV of Rs.120. Company declared 15% dividend on the share. Find the rate of return.

Solution : FV = Rs. 100, MV = Rs.120 D = Dividend = 15% per share.

Remember here, that on investment of Rs.120 Shriyash got Rs. 15.

Let the rate of return be x %

`therefore 15/120=x/100`

`therefore x=(15xx100)/(120)=25/2=12.5%`

ans: The rate of return for Shriyash is 12.5%.