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Question
A company with 10,000 shares of Rs. 100 each, declares an annual dividend of 5%.
- What is the total amount of dividend paid by the company?
- What should be the annual income of a man who has 72 shares in the company?
- If he received only 4% of his investment, find the price he paid for each share.
Solution
Nominal value of 1 share = Rs. 100
Nominal value of 10,000 shares = 10,000 × Rs. 100 = Rs. 10,00,000
1. Dividend% = 5%
= `5/100 xx 10,00,000`
= Rs. 50,000
2. Nominal value of 72 shares = Rs. 100 × 72 = Rs. 7,200
Dividend = 5% of Rs. 7,200
= `5/100 xx 7,200`
= Rs. 360
3. Let market value of 1 share = Rs. y
Then market value of 10,000 shares = Rs. 10,000y
Return% = 4%
Then 4% of Rs. 10,000y = Rs. 50,000
`=> 4/100 xx 10,000y = Rs. 50,000`
`=>` y = Rs. 125
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