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Question
Mr. Parekh invested Rs. 52,000 on Rs. 100 shares at a discount of Rs. 20 paying 8% dividend. At the end of one year, he sells the shares at a premium of Rs. 20. Find:
- the annual dividend.
- the profit earned including his dividend.
Solution
Rate of dividend = 8%
Amount invested = Rs. 52,000
Market price = Rs. 100 – Rs. 20 = Rs. 80
Number of shares purchased = Rs. `(52000)/ 80` = 650
1. Annual dividend = 650 × 8 = Rs. 5,200
2. On selling market rate = Rs. 100 + 20 = Rs. 120
`\implies` Sale price = Rs. 120 × 650 = Rs. 78,000
Profit = Rs. (78,000 – 52,000) = Rs. 26,000
`\implies` Total gain = 26,000 + 5,200 = Rs. 31,200
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