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Question
Mr. Rutvik Invests Rs. 30,000 in buying shares of a company that pays a 12 % dividend annually on Rs. 100 shares selling at a premium of Rs. 50. Find
(i) The number of shares bought by Mr. Rutvik, and
(ii) His annual income from the shares.
Solution
Given that,
Face value of a share (F.V.) = ₹ 100
Premium = ₹ 50
∴ Market value of a share (M.V.) = 100 + 50
= ₹ 150
Dividend = 12%
Mr. Rutvik invests ₹ 30,000 in the shares.
i. ∴ Number of shares bought by Mr. Rutvik
= `"Amount invested"/"Market value"`
= `30000/150`
= 200
ii. Dividend on the share = 12%
∴ Annual income from one share = `12/100 xx 100`
= ₹ 12
∴ His annual income from shares
= number of shares × income from one share
= 200 × 12
= ₹ 2400
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