Question

A man bought 350 shares out of 25000 shares at 150 per share from a bank. If the bank earned a net profit of 27500000 and it decided to distribute 7.5% dividend to its shareholder, how much money did the man get?


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Answer 1

Answer:

A company may need money to start business or to start a new project. The sum of money required is called capital. The required capital is divided into small equal parts, and each part is called share. The company prepares a detailed plan of the proposed project and frames rules and regulations regarding its functioning. They, then, draft a proposal, issue a prospectus, explaining the plan of the project and invite the public to invest money in their project. They, thus, pool up the required funds from the public, by assigning them shares of the company. The value of a share may be Re 1, Rs 10, Rs 100, Rs 1000, etc. The capital is raised by selling these shares. A person who purchases shares of the company becomes a shareholder of the company.

Step-by-step explanation:

Formula

1. Sum invested = No. of shares bought \times  MV of 1 share

2. No. of shares bought =\dfrac{Sum \: invested}{MV \: of \: 1 \: share}  

Also, no. of shares bought =\dfrac{Total \: dividend}{Dividend \: on \: 1 \: share}=\dfrac{Total \: income \: (profit)}{Income \: (profit)}  from 1 share

3. Income (return or profit) = (No. of shares) \times  (rate of dividend) \times  (NV) =(No. of shares) \times  (Dividend on 1 share)

4. Return % = Income (profit) % =\dfrac{Income}{Investment} \times 100 \%  

NOTE: The face value of a share remains the same. The market value of a share changes from time to time.