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Question
Ashutosh buys 400, Rs. 100 shares at a discount of 20 % and receives a return of 12% on his money. Calculate:
(i) The amount invested by Ashutosh.
(ii) The rate of dividend paid by the company.
Solution
Given
Face value of the shares (F.V.) = ₹ 100
Discount = 20%
∴ The market value of the shares (M.V.)
= `100 - (100 xx 20/100)`
= ₹ 80
i. Amount invested by Ashutosh = number of shares × market value of the shares
= 400 × 80
= ₹ 32,000
The amount invested by Ashutosh = ₹
32,000
ii. Dividend (%) = ?
Rate of return = `"Dividend"/"Investment" xx 100`
`12 = "Dividend"/(32,000) xx 100`
Dividend = ₹ 3,840
Let the rate of Dividend be x%
Dividend(₹) = No. of shares × Dividend (%) × F.V.
`3840 = 400 xx x/100 xx 100`
`= 3840/400`
`= 96/10`
x = 9.6
∴ Rate of dividend = 9.6%
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