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Question
Ashwini bought Rs. 40 shares at a premium of 40%. Find the income, if Ashwini invests Rs. 14000 in these shares and receives a dividend at the rate of 8% on the nominal value of the shares.
Solution
Given,
Face value of the shares (F.V.) = ₹ 40
Premium = 40%
∴ The market value of the shares (M.V.)
= `40 + (40 xx 40/100)`
= 40 + 16
= ₹ 56
Ashwini invests ₹ 14000 in these shares
∴ Number of shares bought by Ashwini = `"Amount invested"/"Market value of one share" = 14000/56 = 250`
Dividend = 8%
∴ Annual income on one share = `8/100 xx 40`
= ₹ 3.2
∴ Income of Ashwini on 250 shares = 250 × 3.2
= ₹ 800
∴ Ashwini earns ₹ 800 on her investment.
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