Question

How much should a man invest in Rs. 100 shares selling at Rs. 85 to obtain an annual income of Rs. 1,800; if the dividend declared is 12% ?
Also, find the percentage return on this investment.

• A. 14.22%
• B. 14.11%
• C. 13.11%
• D. 12.23%

Answer 1

Answer: (B)

14.11%

Rate of dividend=12%

face value =Rs.100

market value =Rs.85

$\because$Dividend on 1 share=12% of 100=$\frac{12}{100}\times 100=Rs.12$

$\therefore$Number of share$=\frac{Totaldividend}{Div.of1share}=\frac{1800}{12}=Rs.150$

Sum Invested=No.of share$\times$M.V of each share

$\Rightarrow 150\times 85=Rs.12750$

% Return=$\frac{income}{Investment}\times 100=\frac{1800}{12750}\times 100=14.11$%