Question

Hundred rupee shares of a company are available in the market at a premium of Rs. 20. Find the rate of dividend given by the company, when a man’s return on his investment is 15%.

Answer 1

Nominal value of 1 share = Rs. 100

Market value of 1 share = Rs. 100 + Rs. 20 = Rs. 120

Profit% on investment of 1 share = 15%

Then profit = 15% of Rs. 120 = Rs. 18

∴ Dividend% = `18/100 × 100` = 18%