Question

What sum should Ashok invest in Rs 25 shares, selling at Rs 36 to obtain an income of Rs 720 if the dividend declared is $12\%$? Also find:
(i) the number of shares bought by Ashok,
(ii) the percentage return on his investment.
[4 MARKS]

Answer 1

Each subpart: 2 Marks each

Face value of each share = Rs 25
Market value of each share = Rs 36
Let no. of shares bought = $x$
Total face value of $x$ shares = Rs 25$x$
Dividend = $12\%$ of 25$x$
$\Rightarrow \frac{12}{100}\times 25x=720$
$x=\frac{720\times 100}{12\times 25}=240$
(i) No. of shares purchased by Ashok = 240
(ii) Total investment (market value) = Rs 36 $\times$ 240
= Rs 8640
$\therefore$ Percentage return = $\frac{720}{8640}\times 100\%$
$=\frac{7200}{864}\%=\frac{25\%}{3}\%=8\frac{1}{3}\%$