Question

Amar invest Rs. 25,000 in shares of per value Rs. 25 at 10% premium. The dividend is 20% per annum. Calculate the rate of interest he gets on his money.

• A. 12%
• B. 12.12%
• C. 18.18%
• D. 13.12%

Answer 1

The correct option is C 18.18%

Here, Per value = $Rs25$, Premium = $10\%$

Let the no. of shares be $x$
Thus, the market value of one share = $Rs.25+10\%ofRs.25$ = $25(1+\frac{1}{100})$
= $25\times \frac{11}{10}$ = $Rs.27.5$
As per the question, $27.5x=25000$
$x=909$

Since, dividend per share = $20\%ofRs.25$ = $\frac{20}{100}\times 25$ = $5$

Therefore, dividend on 909 shares = $5\times 909=Rs.4,545$

On $Rs.25,000$ his income is $Rs.4,545$
On $Rs.100$ his income is $\frac{4545}{25000}\times 100$
His income interest = $18.18\%$