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Question
Rs. 50 shares of a company are quoted at a discount of 10%. Find the rate of dividend given by the company, the return on the investment on these shares being 20 per cent.
Solution
Nominal value of 1 share = Rs. 50
Market value of 1 share = Rs. 50 – 10% of Rs. 50
= Rs. 50 – Rs. 5
= Rs. 45
Profit% on investment = 20%
Then profit on 1 share = 20% of Rs. 45 = Rs. 9
∴ Dividend% = `9/50 xx 100` = 18%
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