#### Question

Salman invests a sum of money in Rs. 50 shares, paying 15% dividend quoted at 20% premium. If his annual dividend is Rs. 600, calculate:

1) the number of shares he bought.

2) his total investment.

3) the rate of return on his investment.

#### Solution

Given,

Nominal Value (N.V.) of each share = Rs. 50

Since the shares are quoted at 20% premium,

Market Value (M.V.) of each share = `50 + 20/100 xx 50 = Rs 60`

Dividend = Rs. 600

1) Dividend = Number of shares × dividend percentage × N.V.

Let n be the number of shares

Thus

600 = n x 15% x 50

`=> 600 = n xx 15/100 xx 50`

`=> n = (600 xx 2)/15`

`=> n = 80`

2) Total investment = n × M.V. = 80 × 60 = Rs. 4800

3) Rate of interest = `"Dividend"/"Total Investment" xx 100`

`= 600/4800 xx 100`

= 12.5 %

Is there an error in this question or solution?

#### APPEARS IN

Solution Salman Invests a Sum of Money in Rs. 50 Shares, Paying 15% Dividend Quoted at 20% Premium. If His Annual Dividend is Rs. 600, Calculate: Concept: Shares and Dividends.