Question

A man buys 400 of ₹ 10 shares at a premium of ₹ 2.50 on each share. If the rate of dividend is 12%, then find

1. his investment
2. annual dividend received by him
3. rate of interest received by him on his money

Answer 1

i. Given Number of shares = 400

Face value of a share ₹ 10 market values of a share = 10 + 2.50 = ₹ 12.50

Investment = Number of shares × Market value of a share

= ₹ 400 × 12.50

= ₹ 5000

ii. Annual dividend = Number of shares × Face value × Rate of dividend

= 400 × 10 × 12100

= ₹ 480

iii. Rate of dividend = `"Dividend"/"Investment" xx 100`

= `480/5000 xx 100`

= `48/5`

= 9.6%