A man invests rs. 4800 in shares of a company which was paying 8% dividend at the time when a rs.100 share costs rs.160 . Find (i) his annual income from the shares (ii) the rate of interest he gets on his investment.

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Solution

Dear Student,

$N u m b e r o f s h a r e s p u r c h a s e d = \frac{T o t a l I n v e s t m e n t}{M a r k e t V a l u e o f o n e s h a r e} = \frac{4800}{160} = 30$
$D i v i d e n d p e r s h a r e = R s . 100 \times \frac{8}{100} = R s . 8 N o . o f s h a r e s p u r c h a s e d = D i v i d e n d p e r s h a r e \times n o . o f s h a r e s = R s . 8 \times 30 = R s . 240$
$R a t e o f i n t e r e s t h e g e t s o n h i s i n v e s t m e n t = \frac{T o t a l i n c o m e}{I n v e s t m e n t} * 100 = \frac{240}{4800} * 100 = 5 %$
Regards

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