Question

A company with $10,000$ shares of nominal value of Rs $100$ declares an annual dividend of $8$% to the share holders. Ramesh bought $90$ shares of company at Rs $150$ per share. Calculate the dividend he received and the percentage return on his investment.

Answer 1

Given number of shares = Rs $10,000$.

Nominal value of each share = Rs $100$.

Rate of annual dividend = $8$%.

Number of share = $90$.

Face value of each share = Rs $150$.

Total face value of $90$ shares = $100\ast 90$ = $9,000$.

Therefore amount of dividend = $(9,000\ast 8)/100$

= Rs $720$.

Market value of $90$ share = $90\ast 159$ = Rs $13,500$

Therefore rate of interest = $(720\ast 100)/(13,500\ast 1)$,

= $16/3$

= $5.3$%.