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.
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Solution
Given, Nominal value of 1 share =Rs50 Discount on each share =10% So, the market value of 1 share =Rs50−10% of Rs50 =Rs50−Rs5=Rs45 Also given, Profit % on investment =20% Then the profit on 1 share =20% of Rs45=Rs9 Therefore, Dividend % = 9/50×100=18%