Question

A lady holds 1800, Rs. 100 shares of a company that pays 15% dividend annually. Calculate her annual dividend. If she had bought these shares at 40% premium, what percentage return does she get on her investment? Give your answer to the nearest integer.

Answer 1

Total number of shares = 1800
Nominal value of each share = Rs.100
Rate of dividend = 15%
(i) Total face value of 1800shares
= Rs,100 x 1800
= Rs.180000
∴ Total dividend

= Rs.180000 x `(15)/(100)`
= Rs.27000
(ii) Market value of each share
= Rs.100 + Rs.40
= Rs.140
∴ Total investment
= Rs.140 x 1800
= Rs.252000
∴ Percentage on his return

= `(27000 xx 100)/(252000)`
= 10.7
= 11%  ...(in integers).