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Question
A man invests Rs. 22,500 in Rs. 50 shares available at 10% discount. If the dividend paid by the company is 12%, calculate:
1) The number of shares purchased
2) The annual dividend received.
3) The rate of return he gets on his investment. Give your answer correct to the nearest whole number.
Solution
Total investment = Rs.22,500
Face value = Rs.50
Discount = `10/100 xx 50` = Rs 5
Market value = Face value - discount = Rs.45
Total shares purchased = `22500/45 = 500`
Total dividend = `12/100 xx 50 xx 500 = 3000`
Rateof return = `3000/22500 xx 100 = 13.33% ~~ 13%`
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