Question

Mr. Parekh invested Rs. 52,000 on Rs. 100 shares at a discount of Rs. 20 paying 8% dividend. At the end of one year, he sells the shares at a premium of Rs. 20. Find:

1. the annual dividend.
2. the profit earned including his dividend.

Answer 1

Rate of dividend = 8%

Amount invested = Rs. 52,000

Market price = Rs. 100 – Rs. 20 = Rs. 80

Number of shares purchased = Rs. `(52000)/ 80` = 650

1. Annual dividend = 650 × 8 = Rs. 5,200

2. On selling market rate = Rs. 100 + 20 = Rs. 120

`\implies` Sale price = Rs. 120 × 650 = Rs. 78,000

Profit = Rs. (78,000 – 52,000) = Rs. 26,000

`\implies` Total gain = 26,000 + 5,200 = Rs. 31,200