Question

By investing Rs 7,500 in a company paying 10 per cent dividend, an annual income of Rs 500 is received. What price is paid for each of Rs 100 share?

Answer 1

Total investment = ₹ 7,500

Nominal value of 1 share = ₹ 100

No. of shares purchased = y

Nominal value of y shares = 100 x y = ₹ (100y)

Dividend% = 10%

Dividend = Rs 500

∴ 10% of 100y = Rs 500

`=> 10/100 xx 100"y" = "Rs"  500`

`=> "y" = 500/10 = 50  "shares"`

∴ market Value of 1 shares = `7500/50 = "Rs"  150`