Question

A lady holds 1800, Rs 100 shares of a company that pays 15% dividend annually. Calculate her annual dividend. If she had bought these shares at 40% premium, what is the return she gets as percent on her investment?

Give your answer to the nearest integer.

Answer 1

Nominal value of 1 share = Rs. 100
Market value of 1 share = Rs. 100 + 40% of Rs. 100
= Rs. 100 + Rs. 40 = Rs. 140
No. of shares purchased = 1800
Nominal value of 1800 shares = 1800 $\times$ 100 = Rs. 1,80,000
Market value of 1800 shares = 1800 $\times$ 140 = Rs. 2,52,000

Dividend%= 15%
Dividend = 15% of Rs. 1,80,000
= $\times$ 𝑅𝑠. 1,80,000 = 𝑅𝑠. 27,000

∴ Return % = $\times$ 100%
= $\times$ 100% = 10.7% = 11%