Question

A man bought Rs. 40 shares at a discount of 40%. Find his income, if he invests Rs. 12,000 in these shares and receives a dividend at the rate of 11% on the face value of the shares.

Answer 1

Total investment = Rs.12,000
Nominal value of 1 share = Rs.40
Market value of 1 share = Rs. 40 − 40% of Rs. 40
= Rs. 40 – Rs. 16 = Rs. 24
∴ No of shares purchased = `(12,000)/24` = 500 shares
Nominal value of 500 shares = Rs. 40 × 500 = Rs. 20,000
Dividend % = 11%
Dividend = 11% of Rs. 20,000

= `11 /100`×20,000 = 𝑅s. 2,200