Question

Amit Kumar invests Rs 36,000 in buying Rs 100 shares at Rs 20 premium. The dividend is $15\%$ per annum. Find:
(i) the number of shares he buys
(ii) his yearly dividend
(iii) the percentage return on his investment.
[4 MARKS]

Answer 1

part (i): 1 Mark
part (ii): 2 Marks
part (iii): 1 Mark

Investment = Rs 36,000
Face value of each share = Rs 100
Market value of each share = Rs 100 + $20\%$ of Rs 100
= Rs 120
(i) No. of shares purchased = $\frac{36000}{120}=300$
(ii) Total face value of 300 shares = Rs 300 $\times$ 100
= Rs 30000
Dividend = $15\%$ of Rs 30000
$=\frac{15}{100}\times 30000$
= Rs 4500
(iii) Percentage return = $\frac{4500}{36000}\times 100\%$
$=12.5\%$