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Question
A man invests Rs. 11,200 in a company paying 6 percent per annum when its Rs. 100 shares can be bought for Rs. 140. Find:
- his annual dividend.
- his percentage return on his investment.
Sum
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Solution
Nominal value of 1 share = Rs. 100
Market value of 1 share = Rs. 140
Total investment = Rs. 11,200
No of shares purchased = `11200/140` = 80 shares
Then nominal value of 80 shares = 80 × 100 = Rs. 8,000
1. Dividend% = 6%
Dividend = 6% of Rs. 8,000
= `6/100 xx Rs. 8000`
= Rs. 480
2. Return% = `"Income"/"Investment" xx 100%`
= `480/11200 xx 100%`
= 4.29%
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