Question

A man invests Rs. $22,500$ in Rs. $50$ shares available at $10\%$ discount. If the dividend paid by the company is $12\%$, calculate the rate of return he gets on his investment. Give your answer correct to the nearest whole number.

Answer 1

Investment amount = $Rs.22500$

Return from the investment is the annual dividend that he earns. So the annual dividend earned per share is $0.12\times 50=6$ and the total annual dividend earned is $6\times 500=3000$

So the return on his investment is $Rs.3000$ per annum

So the rate of return he gets is $\frac{3000}{22500}\times 100=13.33$

So the man gets a return of $13\%$ per annum.