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 annual dividend received.

Answer 1

Dividend Yield on a share is the annual dividend received on it divided by the stock price of the share.

The stock price of each share is $Rs.50$ and the dividend yield or the dividend paid is $12\%$, so the annual dividend on one share is $0.12\times 50=6$

So, the man receives $Rs.6$ per share as annual dividend.

Number of shares purchased is $500$ since he buys each share at $10\%$ discount and invests a total of $Rs.22500$.

So, the annual dividend received on all shares is $6\times 500=3000$

So, the annual dividend received is $Rs.3000$