Question

Mr.Tiwari. invested Rs. 29,040 in 15% Rs. 100 shares quoted at a premium of 20%. Calculate:

1. the number of shares bought by Mr Tiwari.
2. Mr. Tiwari’s income from the investment.
3. the percentage return on his investment.

Answer 1

Total investment = Rs. 29,040

Nominal value of 1 share = Rs. 100

Market value of 1 share = Rs. 100 + 20% of Rs. 100

= Rs. 100 + Rs. 20

= Rs. 120

∴ No of shares purchsed = `29040/120` = 242 shares

Nominal value of 242 shares = Rs. 100 × 242 = Rs. 24,200

Dividend% = 15%

Dividend = 15% of Rs. 24,200

= `15/100 xx 24200`

= Rs. 3,630

Income% = `"Income"/"Investment" xx 100%`

= `3630/29040 xx 100%`

= 12.5%