Question

A company with 10000 shares of Rs. 100 each, declares an annual dividend of 5%.
(i) What is the total amount of dividend paid by the company?
(ii) What would be the annual income of a man, who has 72 shares, in the company?
(iii) If he received only 4% on his investment, find the price he paid for each share. 

Answer 1

No. of shares = 10000
Face value of each share = Rs. 100
Rate of dividend = 5%
(i) Total face value of 10000 shares
= Rs. 100 x 10000
= Rs. 1000000
∴ Total amount of dividends

= `(1000000 xx 5)/(100)`
= Rs. 50000
(ii) Income of 722 shares = 72 x 5 = Rs. 360
(iii) Rate of interest on investment = 4%
∴ Market value of each share

= `(100)/(4) xx5`
= Rs. 125.