Question

By investing Rs 7,500 in a company paying 10 per cent dividend, an annual income of Rs 500 is received. What price is paid for each of Rs 100 share?

Answer 1

Total investment = Rs. 7500
rate of dividend = 10%
annual income = Rs. 500
nominal value = Rs. 100

therefore,
no. of shares = $500\times \frac{100}{10}\times \frac{1}{100}$
= 50 shares

market value = $\frac{7500}{50}$
= Rs. 150