Question

A man invests ₹ 4500 in shares of a company which is paying 7.5% dividend. If ₹ 100 shares are available at a discount of 10%, find:

1. number of shares he purchases.
2. his annual income.

Answer 1

Given:

Investment = ₹ 4500

Dividend = 7.5%

Face value (nominal value) of each share = ₹ 100

Shares are available at a 10% discount, so market price = ₹ 90

i. Number of shares `= "Investment"/"Market Price per share"`

`=4500/90`

= 50 shares

ii. Dividend per share = 7.5% of ₹ 100

= ₹ 7.50

Total income = 50 × 7.50

= ₹ 375