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Question
A man invests Rs. 22,500 in Rs. 50 shares available at 10% discount. If the dividend paid by the company is 12%, calculate:
- The number of shares purchased.
- The annual dividend received.
- The rate of return he gets on his investment. Give your answer correct to the nearest whole number.
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Solution
Total investment = Rs. 22,500
Face value = Rs. 50
Discount = `10/100 xx 50` = Rs. 5
Market value = Face value – Discount = Rs. 45
i. Total shares purchased = `22500/45`
= 500
ii. Total dividend = `12/100 xx 50 xx 500`
= 3000
iii. Rate of return = `3000/22500 xx 100`
= 13.33%
= 13%
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