Question

Aman invests ₹.20020 in shares of par value ₹ 26 at $10\%$ premium. The dividend is 15% per annum. Calculate:
(i) the number of shares
(ii) the dividend received by him annually
(iii) the rate of interest he gets on his money.

• A. i) 700, ii) Rs.2730, iii) 13(7/11) %
• B. i) 800, ii) Rs.2730, iii) 13(9/11) %
• C. i) 800, ii) Rs.2030, iii) 13(7/11) %
• D. i) 700, ii) Rs.2030, iii) 12%

Answer 1

The correct option is A

i) 700, ii) Rs.2730, iii) 13(7/11) %

(i) Here, N.V of the share = ₹ 26, Premium = $10\%$, Let the no. of shares be x

Market value of one share = ₹ 26 + $10\%$ of ₹ 26 = ₹ 26 (1 + $\frac{10}{100}$)

= ₹ 26 $\times$ $\frac{11}{10}$ = ₹ $\frac{143}{5}$

Number of shares = $\frac{\text{Total Investment}}{\text{Market Value of one share}}$

x = $\frac{20020\times 5}{143}=700$

(ii) Dividend per share = $15\%$ of ₹ 26 = $\frac{15}{100}$ $\times$ ₹ 26 = ₹ 3.90

Hence, dividend on 700 shares = ₹ 3.90 $\times$ 700 = ₹ 2730.

(iii) Let the rate of interest be x%

We know, Rate of interest x M.V = Dividend % x N.V

$x$ $\times$ $\frac{143}{5}$ = 15 % $\times$ 26

$\frac{x}{100}$ = $\frac{15}{100}$ $\times$ 26 $\times$ $\frac{5}{143}$

Rate of interest = $\frac{150}{11}$ %