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.

Answer 1

No of shares$=1800$

Rate of div$=15$%

$\Rightarrow$The yearly dividend on 1 share=15% of Rs.100$=\frac{15}{100}\times 100=Rs.15$

$\therefore$Annual dividend paid by the company$=1800\times 15=Rs.27000$

Premium$=40$%

$\therefore$ market value of 1 share$=100+40=Rs.140$

$\Rightarrow$ Market value of 1800 shares=$1800\times 140=Rs.252000$

Annual income$=1800\times \frac{15}{100}\times 100=Rs.27000$

% Return=$\frac{income}{investment}\times 100$

$\Rightarrow \frac{27000}{252000}\times 100=10.71=11$%