Question

Shakila purchased 12000 shares of a company of par value ₹ 10 each, paying an annual dividend of 15% at such a price that she gets 10% on her investment. Find the market value of a share.

Answer 1

Given:

Number of shares = 12,000

Par value per share = ₹10

Dividend rate = 15%

Required return (yield) = 10%

Dividend

= 15% of ₹ 10

= ₹ 1.50

Yield = `("Dividend"/"Market Price")xx100`

`=> 10 = (1.50/"Market Price")xx100`

Market Price `= (1.50xx100)/10`

= ₹ 15