Question

A man bought Rs. 40 shares at a premium of 40%. Find his income, if he invests Rs. 14,000 in these shares and receives a dividend at the rate of 8% on the face value of the shares.

Answer 1

Total investment = Rs. 14,000
Nominal value of 1 share = Rs. 40
Market value of 1 share = Rs. 40 + 40% of Rs. 40
= Rs. 40 + Rs. 16 = Rs. 56
∴ No of shares purchased = `(14,000)/56` = 250 shares
Nominal value of 250 shares = Rs. 40 × 250 = Rs. 10,000
Dividend% = 8%
Dividend = 8% of Rs. 10,000

= `8/100 ×10,000` = 𝑅s. 800