Question

A dividend of 10% was declared on shares with a face value of Rs. 60. If the rate of return is
12%, calculate:
(i) The market value of the share.
(ii) The amount to be invested to get an annual income of Rs. 1,200.

Answer 1

(i) Dividend% = 10% Face value = Rs. 60
 Dividend = 10% of Rs. 60

                = `10/100`×𝑅s. 60 = 𝑅s. 6

Let market value = Rs. y

Return% = 12%
12% of Rs (y) = Rs. 6

⇒ `12/100`×𝑦= 𝑅s. 6

⇒ y = Rs. 50

(ii) When income is Rs. 6, then investment is Rs. 50 When income is Rs. 1,200, then investment
= `50/6 ×𝑅s. 1,200
= Rs. 10,000