Question

A company with 10,000 shares of nominal value of Rs 100 declares an annual dividend of $8\%$ to the shareholders.
(i) Calculate the amount of dividend paid by the company.
(ii) Ramesh had bought 90 shares of the company at Rs 150 per share. Calculate the dividend he receives and the percentage return on his investment.
[4 MARKS]

Answer 1

Each subpart: 2 Marks each

Total face value of 10,000 shares = Rs 100 $\times$ 10,000
= Rs 10,00,000
Dividend = $8\%$ of Rs 10,00000
$=\frac{8}{100}\times 10,00000$
= Rs 80,000
(ii) Total face value of 90 shares = Rs 100 $\times$ 90
= Rs 9000
Total market value of 90 shares = Rs 150 $\times$ 90
= Rs 13500
Dividend = $8\%$ of Rs 9000
$=\frac{8}{100}\times 9000$
= Rs 720
Percentage return on the investment = $\frac{720}{13500}\times 100\%$
$=5.33\%$