Question

Which is better investment:

(10%, ₹ 100 shares at ₹ 120) or (8%, ₹ 100 shares at ₹ 72)?

Answer 1

Given:

Option A: 10% on ₹ 100 shares, quoted at ₹ 120.

Option B: 8% on ₹ 100 shares, quoted at ₹ 72.

Step-wise calculation:

1. Annual dividend per share:

A: 10% of ₹ 100 = ₹ 10.

B: 8% of ₹ 100 = ₹ 8.

2. Yield (Annual dividend ÷ Market price):

A: `10/120 = 0.083333...`

= 8.333...%

B: `8/72 = 0.111111...`

= 11.111...%

The 8%, ₹ 100 shares at ₹ 72 is the better investment higher yield: 11.11% vs 8.33%.