Question

Deepak invested in ₹ 25 shares of a company paying 12% dividend. If he received 10% per annum on his investment, at what price did he buy each share?

Answer 1

Given:

Face value of each share = ₹ 25.

Dividend rate = 12% per annum.

Deepak’s return = 10% per annum on his investment.

Step-wise calculation:

1. Dividend (annual) received per share

= `12/100 xx ₹ 25`

= ₹ 3

2. Let market price (purchase price) per share = x.

Return% = `"Dividend per share"/x xx 100`

= 10

3. So, `3/x xx 100 = 10` 

⇒ `3/x = 0.10` 

⇒ `x = 3/0.10`

⇒ x = ₹ 30

Deepak bought each share at ₹ 30.