Question

A man invests a certain sum in buying 15% Rs. 100 shares at 20% premium. Find:

1. his income from one share.
2. the number of shares bought to have an income, from the dividend, Rs. 6480.
3. sum invested.

Answer 1

i. The dividend on one share = 15% of Rs. 100

= Rs. `(15/100 xx 100)`

= Rs. 15

So, the income from one share is Rs. 15.

ii. Number of shares bought by the man

= `"Annual income"/"Dividend on one share"`

= `6480/15`

= Rs. 432

iii. Since the man bought shares of Rs. 100 at 20% premium, the market value of one share

= Rs. `(1 + 20/100) xx 100`

= Rs. `(120/100 xx 100)`

= Rs. 120

∴ His total investment = Number of shares × Market value of one share

= 432 × 120

= Rs. 51,840