A dividend of 13 % was declared on ₹ 100 shares selling at a certain price. If the rate of return is 6.5 % ,calculate
(i) the market value of the shares
(ii) the amount to be invested to obtain an annual dividend of ₹ 3900
i) ₹ 200 (ii) ₹ 60,000
Given that Dividend = 13 % ; N.V = ₹ 100; Rate of return = 6.5 %
M.V x Rate of Return = Dividend % x N.V
M.V × 6. 5 % = 13 % × 100
M.V × 6.5100 = 13100 × 100
M.V = 136.5 × 100
= ₹ 200
ii) Dividend % = 13 % ; N.V = 100
Hence dividend on one share = ₹ 13
To obtain an annual income of ₹ 3900;
We know Annual Income = Dividend on one share x Number of shares
3900 = 13 x Number of shares
Number of shares = 650013
= 300
M.V of one share = ₹ 200 and number of shares = 300
Hence he will have to invest 200 x 300 = ₹ 60,000