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Question
Mohan invested ₹ 29,040 in 15% of ₹ 100 shares of a company quoted at a premium of 20%. Calculate
- the number of shares bought by Mohan
- his annual income from shares
- the percentage return on his investment
Solution
Investment = ₹ 29,040
Rate of dividend = 15%
Number of shares = 100
Premium = 20%
i. Number of shares = `"Investment"/("Market value of a share")`
= `29040/(100 + 20)`
= `29040/120`
= 242
ii. Annual income from shares = (Number of shares) × (Face value of a share) × (Rate of dividend)
= 242 × 100 × 15100
= ₹ 3630
iii. The percentage return on his investment = `"Income"/"Investment" xx 100`
= `3630/29040 xx 100`
= `100/8`
= 12.5%
= `12 1/2%`
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