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 annual income

• A. Rs. $150$
• B. Rs. $220$
• C. Rs. $310$
• D. Rs. $370$

Answer 1

Answer: (D)

Rs. $370$

Total investment $=$ Rs. $7770$

Nominal value $=$ Rs. $100$

Premium $=$ Rs. $5$

Dividend $=5\%$

Therefore, market value $=$ $100+5=$ Rs. $105$

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

Annual income $=$ no.of share $\times$ dividend$\times$ nominal value

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