Question

Mr.Harshal purchased $520$ shares of Face Value $₹10$ when the Market value of the share was $₹35$. Company had given a $20\%$ dividend. The rate of return on investment is _____.

• A. $0.571\%$
• B. $2\%$
• C. $5.71\%$
• D. $20\%$

Answer 1

The correct option is C $5.71\%$

Given that,
FV $=₹10$
MV $=₹35$
Number of shares purchased $=520$

Sum invested
= Number of shares purchased × MV of each share
= $520\times 35$
= $₹18,200$

Dividend received on each share
$=20\%$ of FV of each share
$=20\%$ of $₹10$
$=₹2$

Total dividend received
= Number of shares purchased × Dividend received on each share
$=520\times 2$
$=₹1,040$

∴ Rate of return on investment
$=\frac{Totaldividendreceived}{suminvested}\times 100$
$=\frac{1040}{18200}\times 100\%$
$=5.71\%$

Thus, the rate of return on investment is $5.71\%$