Question

By investing Rs. 7,500 in a company paying 10 percent dividend, an annual income of Rs. 500 is received. What price is paid for each of Rs. 100 share?

Answer 1

Total investment = Rs. 7,500

Nominal value of 1 share = Rs. 100

No. of shares purchased = y

Nominal value of y shares = 100 × y = Rs. (100y)

Dividend% = 10%

Dividend = Rs. 500

∴ 10% of 100y = Rs. 500

`=> 10/100 xx 100y = Rs. 500`

`=> y = 500/10 = 50` shares

∴ Market value of 1 shares = `7500/50` = Rs. 150