Question

A man invests Rs. 7,770 in a company paying 5% dividend when a share of nominal value of Rs. 100 sells at a premium of Rs. 5. Find:

1. the number of shares bought;
2. annual income;
3. percentage income.

Answer 1

Total money invested = Rs. 7,770

Nominal value of 1 share = Rs. 100

Market value of 1 share = Rs. 100 + Rs. 5 = Rs. 105

∴ No. of shares purchased = `7770/105` = 74

Nominal value of 74 shares = 74 × 100 = Rs.  7,400

Annual income = 5% of Rs. 7,400

= `5/100 xx 7400`

= Rs. 370

Income% = `370/7770 xx 100%` = 4.76%