#### Question

Which is the better investment: 16% Rs 100 shares at 80 or 20% Rs 100 shares at 120?

#### Solution

1st case

16% of Rs 100 shares at 80 means;

Market value of 1 share = Rs 80

Nominal value of 1 share = Rs 100

Dividend = 16%

Income on Rs 80= 16% of Rs 100 = Rs 16

income on Rs 1 = 16/80 = Rs 0.20

2nd case

20% of Rs 100 shares at 120 means

Market value of 1 share = Rs 120

Nominal value of 1 share = Rs 100

Dividend = 20%

Income on Rs 120 = 20% of Rs 100= Rs 20

Income on Rs 1 = `20/120 = "Rs" 0.17`

Then 16% Rs 100 shares at 80 is better investment

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Solution Which is the Better Investment: 16% Rs 100 Shares at 80 Or 20% Rs 100 Shares at 120? Concept: Shares and Dividends.