Question

A man invests Rs. 8000 in a company paying 8% dividend when a share of face value of Rs. 100 is selling at Rs. 60 premium,
(i) What is his annual income,
(ii) What percent does he get on his money?

Answer 1

Amount invested by the man in a company = Rs. 8000

Face value = Rs. 100 and Selling Price = Rs. 60

⇒ Market value = 100 + 60 = Rs. 160

So, No. of shares = `"investment"/"market value"`

= `8000/160`

= 50

(i) Therefore, Income = (dividend × face value × No of shares)

= 0.08 × 100 × 50

= Rs. 400

Hence, Annual Income = Rs. 400

Rate of dividend = 8% p.a.

(ii) Rate of interest on his money

= `(400 xx 100)/(8000)`
= 5%.