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Question
Find the market price of 12% ₹ 25 shares of a company which pays a dividend of ₹ 1875 on an investment of ₹ 20000.
| [Hint: | Annual income on 1 share = 12% of ₹ 25 = ₹ 3. |
| Number of shares bought = `"Total annual income"/"Annual income from 1 share" = 1875/3 = 625`. | |
| Market value of each share = `"Total investment"/"Number of shares".`] |
Sum
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Solution
Given: 12% of ₹ 25 shares; total dividend received = ₹ 1875 on an investment of ₹ 20,000.
Step-wise calculation:
1. Dividend (annual) on one share
= 12% of ₹ 25
= ₹ 3
2. Number of shares bought
= `"Total annual dividend"/"Dividend per share"`
= 1875 ÷ 3
= 625
3. Market price (market value) per share
= Total investment ÷ Number of shares
= 20000 ÷ 625
= ₹ 32
The market price of the 12%, ₹ 25 share is ₹ 32.
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