Question

Mr. Saurabh purchased 80 shares of FV ₹60 at a premium of ₹20. If the company is paying 15% dividend , find the rate of return.

• A. 10.75%
• B. 13.5%
• C. 12.25%
• D. 11.25%

Answer 1

The correct option is D 11.25%

Market Value = FV + Premium
= ₹60 + ₹20
= ₹80
Sum invested = Number of shares $\times$ MV
= 80 $\times$80
= ₹6400
Dividend per share = FV $\times \frac{15}{100}$
= 60 $\times \frac{15}{100}$
= ₹9
Total Dividend received for 80 shares = 80 $\times$ 9
= ₹720
Rate of return = $\frac{Dividendincome}{Suminvested}\times 100$
= $\frac{720}{6400}\times 100$
= 11.25%