Question

A man invests a certain sum in buying 15% Rs 100 shares at 20% premium. Find :

(i) his income from one share.

(ii) the number of shares bought to have an income, from the dividend, Rs 6,480.

(iii) sum invested.

Answer 1

1) The dividend on one share=15% of Rs 100

$=Rs(\frac{15}{100}\times 100)=Rs15$

So the income from one share is Rs 15

2) $Numberofsharesboughtbytheman=\frac{annualincome}{dividendononeshare}$

$=\frac{6480}{15}$

$=Rs432$

3) Since the man bought shares of Rs 100 at 20% premium, the market value of one share

$=Rs(1+\frac{20}{100})\times 100$

$=Rs\frac{120}{100}\times 100)$

$=Rs120$

$\therefore Histotalinvestment=numberofshares\times marketvalueofoneshare$

$=432\times 120$

$=Rs51840$