Question

A man invests ₹ 20020 in buying share of N.V ₹ 26 at 10% premium. The dividend on the share is 15% per annum, then find

i) the annual income

ii) the rate of return

• A. ₹ 2630 & 14.63% respectively
• B. ₹ 2730 &13.63% respectively
• C. ₹ 2630 & 13.63% respectively
• D. ₹ 2730 & 14.63% respectively

Answer 1

The correct option is B

₹ 2730 &13.63% respectively

Investment = ₹ 20020

N.V = ₹ 26

M.V ( 10% premium ) = ₹ 26 + 10% of 26

= 26 + 2.6 = ₹ 28.6

Annual Income = No. of shares $\times$ Div% $\times$ N.V

No. of shares $=\frac{AmountInvested}{M.Vof1share}=\frac{20020}{28.6}=700$

Annual Income $=700\times \frac{15}{100}\times 26=2730$

ii) Rate of interest = Profit %

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

$15\times 26=P\times 28.6$

$P=13.63\%$