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Question

Mr Tiwari invested Rs 29,040 in 15% Rs 100 shares quoted at a premium of 20%. Calculate :
(i) the number of shares bought by Mr Tiwari
(ii) Mr Tiwari's income from the investment
(iii) the percentage return on his investment
[3 MARKS]


Solution

Each subpart: 1 Mark each

(i) Market value of 1 share = Rs (100 + 20)
= Rs 120
                              [Given 20% premium]
No. of shares bought = InvestmentMV of 1 share
=29,040120=242
(ii) Dividend per share = Rs 15
Total dividend =Rs(15×242)=Rs 3630
Hence, Tiwari's income from investment is Rs 3630
(iii) Percentage return = (363029040×100)%
12.5%

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