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Question
By investing Rs. 7500 in a company paying 10 percent dividend, an income of Rs. 500 is received. What price is paid for each Rs.100 share
Solution
Investment = Rs.7500
Rate of dividend = 10%,
Total income = Rs.500.
Face value of each share = Rs.100
Total face value
= `(100 xx 500)/(10)`
= Rs.5000
If face value is Rs. 5000, then investment = Rs.7500
and if face value is Rs. 100 then market value of each share
= `(7500 xx 100)/(5000)`
= Rs.150.
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