Question

A man invests ₹ 3,360 in buying shares of nominal value ₹ 24 and selling at 12% premium. The dividend on the shares is 15% per annum. Calculate:

1. the number of shares he buys;
2. the dividend he receives annually.

Answer 1

(i) F.V. = ₹ 24

Premium = 12%

= `12/100 × 24`

= ₹ 2.88

Market value = ₹ 24 + ₹ 2.88

= ₹ 26.88

Investment = ₹ 3,360

No. of shares = `(3,360)/26.88`

= 125

Hence, the no. of shares = 125.

(ii) By formula,

Annual income = No. of shares × Rate of div. × N.V. of 1 share

= `125 × 15/100 × 24`

= ₹ 450.

Hence, dividend received annually = ₹ 450.