Question

Akshay buys 350 shares of ₹ 50 par value of a company. The dividend declared by the company is 14%. If his return percent from the shares is 10%, find the market value of each share.

Answer 1

Given:

Number of shares = 350

Par (nominal) value per share = ₹ 50

Dividend declared = 14% of par

Return (yield) = 10%

Step-wise calculation:

1. Dividend (income) per share

= 14% of ₹ 50 

= 0.14 × 50

= ₹ 7

2. Use the relation:

Return% × Market Value (MV) 

= Dividend% × Nominal Value (NV) 

So, MV = `("Dividend"% xx "NV")/("Return"%)`.

3. MV per share

= `(14% xx ₹ 50)/(10%)` 

= `(14 xx 50)/10`

= `700/10` 

= ₹ 70

The market value of each share is ₹ 70.