Question

Rs. 50 shares of a company are quoted at a discount of 10%. Find the rate of dividend given by the company, the return on the investment on these shares being 20 per cent.

Answer 1

Nominal value of 1 share = Rs. 50

Market value of 1 share = Rs. 50 – 10% of Rs. 50

= Rs. 50 – Rs. 5

= Rs. 45

Profit% on investment = 20%

Then profit on 1 share = 20% of Rs. 45 =  Rs. 9

∴ Dividend% = `9/50 xx 100` = 18%