Question

A man buys shares of nominal value ₹84 in a company, which pays 20% dividend. He buys the shares at such a price that his profit is 14% on his investment. At what price did he buy the shares?

• A. ₹100
• B. ₹120
• C. ₹140
• D. ₹160

Answer 1

The correct option is B ₹120

Suppose the man buys one share for x.

He earns profit of 14% on that i.e., $\frac{14}{100}\times x$

Dividend given by company on each share is 20% of nominal value of the share.

So dividend given by company $=\frac{20}{100}\times ₹84$

According to the question;

$\frac{14x}{100}=\frac{20}{100}\times 84\Rightarrow x=₹120$

Direct method

Rate of Dividend $\times$ N.V = Profit % $\times$ M.V

$\Rightarrow \frac{20}{100}\times 84=\frac{14}{100}\times x$

$\Rightarrow x=₹120$