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 is the return she gets as percent on her investment? Give your answer to the nearest integer.

Answer 1

Nominal value of 1 share = Rs. 100

Market value of 1 share = Rs. 100 + 40% of Rs. 100

= Rs. 100 + Rs. 40

= Rs. 140

No. of shares purchased = 1800

Nominal value of 1800 shares = 1800 × 100 = Rs. 1,80,000

Market value of 1800 shares = 1800 × 140 = Rs. 2,52,000

1. Dividend% = 15%

Dividend = 15% of Rs. 1,80,000

= `15/100 xx Rs. 1,80,000`

= Rs. 27,000

2. ∴ Return% = `"Income"/"Investment" xx 100%`

= `(27,000)/(2,52,000) xx 100%`

= 10.7% 

= 11%