Question

By purchasing Rs. 25 shares for Rs. 40 each, a man gets a 4 percent profit on his investment. What rate percent is the company paying? What is his dividend if he buys 60 shares?

Answer 1

Nominal value of 1 share = Rs. 25

Market value of 1 share = Rs. 40

Profit% on investment = 4%

Then profit on 1 share = 4% of Rs. 40 = Rs. 1.60

∴ Dividend% = `1.60/25 × 100` = 6.4%

No. of shares purchased = 60

Then dividend on 60 shares = 60 × Rs. 1.60 = Rs. 96