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Question

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


  1. i) ₹ 100  (ii) ₹ 30,000

  2. i) ₹ 150  (ii) ₹ 40,000

  3. i) ₹ 500  (ii) ₹ 50,000

  4. i) ₹ 200  (ii) ₹ 60,000


Solution

The correct option is D

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

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