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Question
Geeta buys Rs.100 shares of a company that pays a 15 % dividend. She buys the shares at a price from the market that gives her a 10% return on her investment. At what price did she buy each share?
Solution
Given that,
Face value of the share (F.V.) = ₹ 100
Dividend = 15%
∴ Annual income from the share = `15/100 xx 100`
= ₹ 15
Rate of return on investment = 10%
Rate of return = `"Annual income"/"Market price" xx 100`
∴ 10 = `15/"Market price" xx 100`
∴ Market price = `1500/10` = ₹ 150
∴ Geeta bought each share from the market at ₹ 150.
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