Question

Find the annual dividend received from Rs. 25000, 8% stock at 108.

Answer 1

Amount invested = ₹ 25,000

Dividend = 8%

Assuming face value F.V. as ₹ 100

Annual income per share

= `"Dividend"/100 xx "Face value"`

= `8/100 xx 100`

= ₹ 8

The market value of the share M.V. = ₹ 108

∴ Rate of return = `"Annual income per share"/"Market value" xx 100`

Rate of return = `8/108 xx 100 = 7.4%`

Annual dividend on amount invested

= Rate of return × amount invested

= `7.4/100 xx 25,000`

= ₹ 1850

∴ Annual dividend of ₹ 1850 is received from 8% stock at ₹ 108.

Alternate approach

Assuming ₹ 25,000 as the total face value of all the shares. Since the dividend is 8%,

Annual dividend = `8/100 xx 25,000 = ₹ 2,000`