Question

A man invests Rs. $7,770$ in a company paying $5$ per cent dividend when a share of nominal value of Rs. $100$ sells at a premium of Rs. $5$. Find percentage income (rounded off to nearest integer).

• A. $3\%$
• B. $5\%$
• C. $7\%$
• D. $9\%$

Answer 1

Answer: (B)

$5\%$

Total investment $=$ Rs. $7770$

Nominal value $=$ Rs. $100$

Premium $=$ Rs. $5$

Dividend $=$ $5\%$

$\therefore$ Market value $=$ $100+5=$ Rs. $105$

No of share$=\frac{\text{Total investment}}{\text{Market value}}=\frac{7770}{105}=74$

$\therefore$ Annual income $=$ number of share $\times$ dividend$\times$ nominal value

$\Rightarrow 74\times \frac{5}{100}\times 100=$ Rs. $370$

Income $\%$ $=\frac{\text{income}}{\text{investment}}\times 100\%$

$\Rightarrow \frac{370}{7770}\times 100=4.76$ $\%=$ $5\%$