Question

Geeta buys Rs.100 shares of a company that pays a 15 % dividend. She buys the shares at a price from the market that gives her a 10% return on her investment. At what price did she buy each share?

Answer 1

Given that,

Face value of the share (F.V.) = ₹ 100

Dividend = 15%

∴ Annual income from the share = `15/100 xx 100`

= ₹ 15

Rate of return on investment = 10%

Rate of return = `"Annual income"/"Market price" xx 100`

∴ 10 = `15/"Market price" xx 100`

∴ Market price = `1500/10` = ₹ 150

∴ Geeta bought each share from the market at ₹ 150.