Question

A company issued 50,000 shares of par value Rs. 10 each. If the total dividend declared by the company is Rs. 62,500, find the rate of dividend paid by the company.

Answer 1

Step 1:

Given information:

Number of shares$=50,000$

Par value of a share$=\mathrm{Rs}.10$

Total dividend$=\mathrm{Rs}.62,500$

Step 2:

Calculating the rate of dividend:

Total par value of 50,000 shares$=50,000\times 10=\mathrm{Rs}.5,00,000$

Calculate the rate of dividend.

$$\begin{gathered} \mathrm{Rate}\mathrm{of}\mathrm{dividend}=\frac{\mathrm{Total}\mathrm{dividend}}{\mathrm{Total}\mathrm{par}\mathrm{value}\mathrm{of}\mathrm{shares}}\times 100\% \\ \Rightarrow \mathrm{Rate}\mathrm{of}\mathrm{dividend}=\frac{62,500}{5,00,000}\times 100\% \\ \Rightarrow \mathrm{Rate}\mathrm{of}\mathrm{dividend}=\frac{625}{50}\% \\ \Rightarrow \mathrm{Rate}\mathrm{of}\mathrm{dividend}=\frac{25}{2}\% \\ \therefore \mathrm{Rate}\mathrm{of}\mathrm{dividend}=12\frac{1}{2}\% \end{gathered}$$

Hence, the rate of dividend paid by the company is $12\frac{1}{2}\%$.