Question

Ashwini bought Rs. 40 shares at a premium of 40%. Find the income, if Ashwini invests Rs. 14000 in these shares and receives a dividend at the rate of 8% on the nominal value of the shares.

Answer 1

Given,

Face value of the shares (F.V.) = ₹ 40

Premium = 40%

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

= `40 + (40 xx 40/100)`

= 40 + 16

= ₹ 56

Ashwini invests ₹ 14000 in these shares

∴ Number of shares bought by Ashwini = `"Amount invested"/"Market value of one share" = 14000/56 = 250`

Dividend = 8%

∴ Annual income on one share = `8/100 xx 40`

= ₹ 3.2

∴ Income of Ashwini on 250 shares = 250 × 3.2

= ₹ 800

∴ Ashwini earns ₹ 800 on her investment.