Question

A man invests Rs 11,200 in a company paying 6 percent per annum when its Rs 100 shares can be bought for Rs 140. Find :

(i) his annual dividend.

(ii) his percentage return on his investment.

Answer 1

(i)Nominal value of 1 share = Rs.100
Market value of 1 share = Rs. 140
Total investment = Rs. 11,200
∴ No of shares purchased = = 80 shares
Then nominal value of 80 shares = 80 $\times$ 100 = Rs. 8,000
Dividend%= 6%
Dividend = 6% of Rs. 8,000 = $\times$𝑅𝑠. 8,000 = 𝑅𝑠. 480

(ii) Return % = $\times$100%
= $\times$100% = 4.29%