Question

A medicine company declared a semi-annual dividend of $7\frac{1}{2}\%$. Find the annual dividend of a person, owning 1,250 shares of the company having a par value of Rs. 10 each.

Answer 1

Step 1:

Given information:

Face value of each share$=\mathrm{Rs}.10$

Rate of semi-annual dividend$=7\frac{1}{2}\%$

Number of shares$=1,250$

Step 2:

Calculate annual dividend:

Annual dividend rate$=2\times \left(7\frac{1}{2}\right)=2\times \frac{15}{2}=15\%$

Since, face value of each share is Rs. 10.

Value of 1,250 shares$=1,250\times 10=\mathrm{Rs}.12,500$

$$\begin{gathered} \therefore \mathrm{Annual}\mathrm{dividend}=15\%\mathrm{of}12,500 \\ \Rightarrow \mathrm{Annual}\mathrm{dividend}=12,500\times \frac{15}{100} \\ \Rightarrow \mathrm{Annual}\mathrm{dividend}=125\times 15 \\ \Rightarrow \mathrm{Annual}\mathrm{dividend}=\mathrm{Rs}.1,875 \end{gathered}$$

Hence, the annual dividend of person is Rs. 1,875.