Question

A man invests a sum of money in ₹ 25 shares, paying 12% dividend and quoted at ₹ 36. If his annual income from these shares is ₹ 720, calculate:

1. his total investment, 
2. the number of shares bought by him; 
3. the percentage return on his investment.

Answer 1

Given:

Face value of each share = ₹ 25

Dividend = 12% (on face value)

Quoted (market) price = ₹ 36 per share

Annual income from shares = ₹ 720

Step-wise calculation:

1. Dividend (income) on one share = 12% of ₹ 25 

= `12/100 xx 25`

= ₹ 3

2. Number of shares = `"Total annual income"/"Income per share"` 

= `720/3` 

= 240 shares

3. Total investment = Number of shares × Market price

= 240 × 36

= ₹ 8,640

4. Percentage return = `("Annual income"/"Total investment") xx 100`

= `(720/8640) xx 100` 

= 8.333...%

= `8 1/3%`