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Question
A company with 10,000 shares of nominal value of Rs. 100 declares an annual dividend of 8% to the share-holders.
- Calculate the total amount of dividend paid by the company.
- Ramesh had bought 90 shares of the company at Rs. 150 per share. Calculate the dividend he receives and the percentage of return on his investment.
Solution
i. Number of shares = 10,000
Nominal value of each share = Rs. 100
Rate of annual dividend = 8%
Total face value of 10,000 shares
= Rs. 100 × 10,000
= Rs. 10,00,000
And amount of dividend
= Rs. `(10,00,000 xx 8)/(100)`
= Rs. 80,000
ii. Number of shares = 90
Face value of each share = Rs. 150
Total face value of 90 shades
= Rs. 100 × 90
= Rs. 9,000
∴ Amount of dividend
= Rs. `(9,000 xx 8)/(100)`
= Rs. 720
Market value of 90 shares
= 90 × 150
= Rs. 13,500
∴ Rate of interest
= `(720 xx 100)/(13,500)`
= `(16)/(3)`
= `5(1)/(3)%`
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