Question

Ashutosh buys 400, Rs. 100 shares at a discount of 20 % and receives a return of 12% on his money. Calculate:

(i) The amount invested by Ashutosh.

(ii) The rate of dividend paid by the company.

Answer 1

Given

Face value of the shares (F.V.) = ₹ 100

Discount = 20%

∴ The market value of the shares (M.V.)

= `100 - (100 xx 20/100)`

= ₹ 80

i. Amount invested by Ashutosh = number of shares × market value of the shares

= 400 × 80

= ₹ 32,000
The amount invested by Ashutosh = ₹

32,000

ii. Dividend (%) = ?

Rate of return = `"Dividend"/"Investment" xx 100`

`12 = "Dividend"/(32,000) xx 100`

Dividend = ₹ 3,840

Let the rate of Dividend be x%

Dividend(₹) = No. of shares × Dividend (%) × F.V.

`3840 = 400 xx x/100 xx 100`

`= 3840/400`

`= 96/10`

x = 9.6

∴ Rate of dividend = 9.6%