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Question

Mr. Michel invested Rs 52000 on Rs 100 shares at a discount of Rs 20 paying 8% dividend. At the end of one year he sells the shares at a premium of Rs 20. Find his annual dividend.


A

Rs 80000

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B

Rs 6000

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C

Rs 52000

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D

Rs 5200

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Solution

The correct option is D

Rs 5200


Face value of one share = Rs 100

Market value of one share = 80% of Rs 100

= 80/100 × 100 = Rs 100

Investment = Rs 52000

Number of shares purchased = 52000/80 = 650

Total face value = Rs 650 × 100 = Rs 65000

Annual dividend = 8% of Rs 65000

= 8/100 × 65000 = Rs 5200.


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