Question

Ram invested $Rs.29,040$ in $15\%$ $Rs.100$ shares quoted at a premium of $20\%$. Calculate :
i) the number of shares bought by Ram
ii) Ram's income from the investment
iii) the percentage return on his investment

Answer 1

Total investment$=Rs29,040$

Nominal value of 1 share $=Rs100$

Market value of 1 share $=Rs100+20\%ofRs100$

$=Rs100+Rs20=Rs120$

$\therefore$ Number of shares purchased$=\frac{29040}{120}=242shares$

Nominal value of 242 shares$Rs100\times 242=Rs24,200$

Dividend%$=15\%$

Dividend $=15\%ofRs24,200$

$=\frac{15}{100}\times 24200=Rs3630$

Income%$=\frac{Income}{Investment}\times 100$

$=\frac{3630}{29040}\times 100$

$=12.5\%$