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Question
A man invests Rs. 7,770 in a company paying 5% dividend when a share of nominal value of Rs. 100 sells at a premium of Rs. 5. Find:
- the number of shares bought;
- annual income;
- percentage income.
Solution
Total money invested = Rs. 7,770
Nominal value of 1 share = Rs. 100
Market value of 1 share = Rs. 100 + Rs. 5 = Rs. 105
∴ No. of shares purchased = `7770/105` = 74
Nominal value of 74 shares = 74 × 100 = Rs. 7,400
Annual income = 5% of Rs. 7,400
= `5/100 xx 7400`
= Rs. 370
Income% = `370/7770 xx 100%` = 4.76%
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