Question

A man buys Rs. 75 shares at a discount of Rs. 15 of a company paying 20% dividend. Find:

1. the market value of 120 shares;
2. his annual income;
3. his profit percent.

Answer 1

Nominal value of 1 share = Rs. 75

Market value of 1 share = Rs. 75 – Rs. 15 = Rs. 60

Market value of 120 shares = 120 × 60 = Rs. 7,200

Nominal value of 120 shares = 120 × 75 = Rs. 9,000

Annual income = 20% of Rs. 9,000

= `20/100 xx 9000`

= Rs. 1,800

Profit% = `1800/7200 xx 100%` = 25%