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Question
How much should a man invest in Rs. 100 shares selling at Rs. 110 to obtain an annual income Rs. 1,680, if the dividend declared is 12%?
Solution
Nominal value of 1 share = Rs. 100
Market value of 1 share = Rs. 110
Let no. of shares purchased = n
Then nominal value of n shares = Rs. (100n)
Dividend% = 12%
Dividend = Rs. 1,680
∴ 12% of 100n = Rs. 1,680
Then market value of 140 shares = 140 × 110 = Rs. 15,400
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