A company pays a dividend of 20% on its ₹10 shares from which it deducts income tax at the rate of 18%. Find the annual income of a man after tax who owns one thousand shares of this company.

₹1370

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₹1270

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₹1640

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₹1200

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Solution

The correct option is C ₹1640
N.V of the share is ₹10.

No. of shares = 1000

Dividend % = 20%

Annual Dividend = No. of share $\times$ Dividend % $\times$ N.V

Dividend $= 1000 \times \frac{20}{100} \times 10 = ₹ 2000$

Income tax deduction on this dividend is 18%.

So, his annual income after deduction will be equal to (₹2000 - 18% of ₹2000).

$= 2000 - \frac{18}{100} \times 2000$

= 2000 - 360

= ₹1640

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