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.
Give your answer correct to the nearest whole number.
[3 MARKS]

Answer 1

Each subpart: 1 Mark each

(i)Nominal vlaue of one share = Rs 100
Market value of one share
= Nominal value + Premium
= Rs (100 + 20) = Rs 120
$\therefore Numberofshares=\frac{36,000}{120}=300$
(ii) Yearly dividend
$=\frac{Dividend\%\times Numberofshares\times NV}{100}$
$=\frac{15\times 300\times 100}{100}=Rs4500$
(iii) Percentage return
$=\frac{Yearlydividend}{Totalinvestment}\times 100=\frac{4500}{36000}\times 100$
$12.5\%\approx 13\%$