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Question

# a) A company with 10,000 shares of Rs 100 each declares an annual dividend of 5%. (i) What is the total amount of dividend paid by the company? (ii) What would be the annual income of a man, who has 72 shares in the company? (iii) If he received only 4% on his investment, find the price he paid for each share. b) A company with 4000 shares of nominal value of Rs 110 each declares an annual dividend of 15%, Calculate: (i) the total amount of dividend paid by the company. (ii) the annual income of Shahrukh who hold 88 shares in the company. (iii) if he received only 10% on his investment, find the price Shahrukh paid for each share. [6 MARKS]

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Solution

## Each subpart: 3 Marks each a) (i) Total face value = Rs 100 × 10,000 = Rs 10,00,000 Total amount of dividend = 5% of Rs 10,00,000 = Rs 50,000 (ii) Annual income on 72 shares = 5% of Rs (72 × 100) =Rs 5100×72×100=Rs 360 (iii) Price paid for each share = Dividend% return on investment×No. of shares =3604100×72=Rs 360×10072×4 ⇒ Price paid for each share = Rs 125 b) (i) Total amount of dividend paid by the company 15% of 4000×110=Rs 15100×4000×110 = Rs 66000 (ii) Annual income of Shahrukh = 15% of 88×110=Rs 15100×88×110=Rs 1452 (iii) Dividend on 1 share = 15% of 110=Rs 15100×110=Rs 16.50 Let price paid by Shahrukh for each share = Rs x His profit on one share = 10% of x = Rs x10 x10=16.50⇒x=Rs 165 Thus, price paid by Shahrukh for each share = Rs 165.

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