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Question

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


A
10.75%
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B
10.25%
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C
12.25%
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D
11.25%
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Solution

The correct option is D 11.25%
Market Value = FV + Premium
= ₹60 + ₹20
= ₹80
Sum invested = Number of shares ×MV
= 80 ×80
= ₹6400
Dividend per share = FV ×15100
= 60 ×15100
= ₹9
Total Dividend received for 80 shares = 80 × 9
= ₹720

Rate of return = Dividend incomeSum invested×100

          = 7206400×100

= 11.25%

Mathematics

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