Bhargav buys 400, twenty-dollar shares at a premium of Rs. 4 each and receives a dividend of 12%.
Find:
(i) The amount invested by Bhargav
(ii) His total income from the shares.
(iii) Percentage return on his money.
Solution
Given that,
Face value of the shares (F.V.) = ₹ 20
Premium = ₹ 4
∴ The market value of the shares (M.V.) = ₹ 24
Dividend = 12 %
∴ Annual income from the share = `12/100 xx 20`
= ₹ 2.4
Bhargav buys 400 shares
i. The amount invested by Bhargav
= number of shares × market value
= 400 × 24 = ₹ 9600
ii. Bhargav’s income from the shares
= number of shares × annual income from one share
= 400 × 2.4 = ₹ 960
iii. Percentage return on Bhargav’s money
= `"Total annual income"/"Total amount invested" xx 100`
= `960/9600 xx 100`
= 10%
∴ Bhargav gets 10% as the rate of return on his money.
