# Nilesh has the option of investing his money in 8% Rs. 10 shares at a premium of Rs.3.50 or 7% Rs. 100 shares at a premium of 20%. Which of the two investments will be more profitable for him? - Mathematics and Statistics

Sum

Nilesh has the option of investing his money in 8% Rs. 10 shares at a premium of Rs.3.50 or 7% Rs. 100 shares at a premium of 20%. Which of the two investments will be more profitable for him?

#### Solution

For share 1:

Face value of the share (F.V.) = ₹ 10

∴ Market value of the share (M.V.) = 10 + 3.5

= ₹ 13.5

Dividend = 8 %

∴ Annual income from the share = 8/100 xx 10

= ₹ 0.8

Profit percentage = "Annual income"/"Market value" xx 100

= 0.8/13.5 xx 100

= 800/135

≈ 5.93%

For share 2

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

∴ Market value of the share (M.V.) = 100 + (20/100 xx 100)

= ₹ 120

Dividend = 7 %

Annual income from the share = 7/100 xx 100

= ₹ 7

Profit percentage = "Annual income"/"Market value" xx 100

= 7/120 xx 100

≈ 5.833%

Since, profit percentage from share 1 > profit percentage from share 2, investing in the first kind of shares will be more profitable for Nilesh.

Concept: Shares and Dividends
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Chapter 9: Commercial Mathematics - Exercise 9.7 [Page 141]

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