Question

Rs 50 shares of a company are quoted at a discount of 10%. Find the rate of dividend given by the company. the return on the investment on these shares being 20 percent.

Answer 1

Nominal value of 1 share = Rs. 50
Market value of 1 share = Rs. 50 − 10% of Rs. 50
= Rs. 50 – Rs. 5 = Rs. 45
Profit % on investment = 20%
Then profit on 1 share = 20% of Rs. 45 = Rs. 9
∴ Dividend % = 9 50 $\times$ 100% = 18%