Question

A company with 500 shares of nominal value ₹ 120 declares an annual dividend of 15%.

Calculate:

1. the total amount of dividend paid by the company.
2. annual income of Mr. Sharma who holds 80 shares of the company.
3. If the return per cent of Mr. Sharma from his shares is 10%, find the market value of each share.

Answer 1

Given:

Total shares = 500

Nominal value per share = ₹ 120

Dividend declared = 15%

Mr. Sharma holds = 80 shares

Return (yield) for Mr. Sharma = 10%

Total Nominal Value = 500 × 120

= ₹ 60,000

Dividend = 15% of ₹ 60,000

`=15/100xx60000`

= ₹ 9,000

Nominal Value = 80 × 120

= ₹ 9600

Income = 15% of ₹ 9600

`=15/100xx9600`

= ₹ 1,440

Yield `= ("Dividend"/"Market Value")xx100`

`10=(18/"MV")xx100`

Since dividend per share = 15% of ₹ 120 

= ₹ 18

MV `(18xx100)/10`

= ₹ 180