A dividend of $9$ % was declared on Rs $100$ share selling at a certain price. If the rate of return is $7.5$ %. Calculate the market value of the share.

100

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200

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120

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None of the above

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Solution

The correct option is C $120$
Given, Dividend per share $= 9 %$ of Rs. $100$ $=$ Rs. $9$
Let the market value of $1$ share be $x$
Therefore, profit on $1$ share $= 7 \frac{1}{2}$ of Rs. $x$ Rs. $= \frac{15}{2} \times \frac{1}{100} \times x =$ Rs. $\frac{3 x}{40}$ .
$x = 9 (\frac{40}{3}) =$ Rs. $120$
Therefore, market value of each share $=$ Rs. $120$ .

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