Question

Mr. Rutvik Invests Rs. 30,000 in buying shares of a company that pays a 12 % dividend annually on Rs. 100 shares selling at a premium of Rs. 50. Find

(i) The number of shares bought by Mr. Rutvik, and

(ii) His annual income from the shares.

Answer 1

Given that,

Face value of a share (F.V.) = ₹ 100

Premium = ₹ 50

∴ Market value of a share (M.V.) = 100 + 50

= ₹ 150

Dividend = 12%

Mr. Rutvik invests ₹ 30,000 in the shares.

i. ∴ Number of shares bought by Mr. Rutvik

= `"Amount invested"/"Market value"`

= `30000/150`

= 200

ii. Dividend on the share = 12%

∴ Annual income from one share = `12/100 xx 100`

= ₹ 12

∴ His annual income from shares

= number of shares × income from one share

= 200 × 12

= ₹ 2400