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Question
Sudhakar invests Rs. 1344 in buying shares of face value Rs.24 selling at 12% premium. The dividend on the shares is 15% per annum. Calculate
(i) The number of shares Sudhakar buys, and
(ii) The dividend he receives annually.
Solution
Given that,
Face value of the share (F.V.) = ₹ 24
Premium = 12%
∴ The market value of the share (M.V.)
= `24 + (12/100 xx 24)`
= ₹ 26.88
i. Sudhakar invests ₹ 1344 in the shares
∴ Number of shares purchased by Sudhakar
= `1344/26.88 = 50`
∴ Sudhakar buys 50 shares.
ii. Dividend on the share = 15%
Annual income on one share = `15/100 xx 24`
= ₹ 3.6.
∴ The total dividend he receives annually
= 50 × 3.6 = ₹ 180
∴ Sudhakar receives ₹ 180 as his annual dividend.
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