Question

A company with 10,000 shares of Rs. 100 each, declares an annual dividend of 5%.

1. What is the total amount of dividend paid by the company?
2. What should be the annual income of a man who has 72 shares in the company?
3. If he received only 4% of his investment, find the price he paid for each share.

Answer 1

Nominal value of 1 share = Rs. 100

Nominal value of 10,000 shares = 10,000 × Rs. 100 = Rs. 10,00,000

1. Dividend% = 5%

= `5/100 xx 10,00,000`

= Rs. 50,000

2. Nominal value of 72 shares = Rs. 100 × 72 = Rs. 7,200

Dividend = 5% of Rs. 7,200

= `5/100 xx 7,200`

= Rs. 360

3. Let market value of 1 share = Rs. y

Then market value of 10,000 shares = Rs. 10,000y

Return% = 4%

Then 4% of Rs. 10,000y = Rs. 50,000

`=> 4/100 xx 10,000y = Rs. 50,000`

`=>` y = Rs. 125