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Question
Hundred rupee shares of a company are available in the market at a premium of Rs. 20. Find the rate of dividend given by the company, when a man’s return on his investment is 15%.
Solution
Nominal value of 1 share = Rs. 100
Market value of 1 share = Rs. 100 + Rs. 20 = Rs. 120
Profit% on investment of 1 share = 15%
Then profit = 15% of Rs. 120 = Rs. 18
∴ Dividend% = `18/100 × 100` = 18%
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