Question

Sudhakar invests Rs. 1344 in buying shares of face value Rs.24 selling at 12% premium. The dividend on the shares is 15% per annum. Calculate

(i) The number of shares Sudhakar buys, and

(ii) The dividend he receives annually.

Answer 1

Given that,

Face value of the share (F.V.) = ₹ 24

Premium = 12%

∴ The market value of the share (M.V.)

= `24 + (12/100 xx 24)`

= ₹ 26.88

i. Sudhakar invests ₹ 1344 in the shares

∴ Number of shares purchased by Sudhakar

= `1344/26.88 = 50`

∴ Sudhakar buys 50 shares.

ii. Dividend on the share = 15%

Annual income on one share = `15/100 xx 24`

= ₹ 3.6.

∴ The total dividend he receives annually

= 50 × 3.6 = ₹ 180

∴ Sudhakar receives ₹ 180 as his annual dividend.