Question

Salman invests a sum of money in Rs. 50 shares, paying 15% dividend quoted at 20% premium. If his annual dividend is Rs. 600, calculate:

1. the number of shares he bought.
2. his total investment.
3. the rate of return on his investment.

Anaya invests a sum of money in ₹ 50 shares, paying 15% dividend quoted at 20% premium. If her annual dividend is ₹ 600, calculate:

1. the number of shares she bought.
2. her total investment.
3. the rate of return on her investment.

Answer 1

Given,

Nominal Value (N.V.) of each share = Rs. 50

Since the shares are quoted at 20% premium,

Market Value (M.V.) of each share = `50 + 20/100 xx 50`

= Rs. 60

Dividend = Rs. 600

1) Dividend = Number of shares × dividend percentage × N.V.

Let n be the number of shares:

Thus,

600 = n × 15% × 50

`=> 600 = n xx 15/100 xx 50`

`=> n =  (600 xx 2)/15`

`=> n = 80`

2) Total investment = n × M.V.

= 80 × 60 

= Rs. 4800

3) Rate of interest = `"Dividend"/"Total Investment" xx 100`

`= 600/4800 xx 100`

= 12.5 %