Question

A share of the value Rs. 100 was purchased for Rs. 150. The company declared a dividend of 60%. What is the rate of return on investment?

Answer 1

Given:

Face value (FV) = Rs. 100

Purchase price (market value) = Rs. 150

Dividend declared = 60%

Step-wise calculation:

1. Dividend per share = FV × Dividend%

= 100 × 60%

= Rs. 60

2. Rate of return = `("Dividend per share"/"Purchase price") xx 100` 

= `(60/150) xx 100` 

= 40%

Rate of return on the investment = 40%.