Question

A man buys 400, twenty-rupees at a premium of Rs 4 each and receives as dividend of 12%. Find:
(i) The amount invested by him
(ii) his total income from the shares
(iii) Percentage return on his money​

Answer 1

Given :

Number of share bought = 400

Nominal value of 1 share = Rs 25

Premium value = Rs 4 each

The dividend = 12 %

To Find:

(i) The amount invested by man

(ii) Total income from the shares

(iii) Percentage return on his money​

Solution :

( i )

Number of share bought = 400

Nominal value of 1 share = Rs 25

So, Total invested = 400 × 25

                            = Rs 10000

Nominal value of 1 share = Rs 25

Market value of 1 share = 25 - 12% of 25

                                      = 25 - 3

                                      = Rs 21

∵ Number of share bought = 400

So, Nominal value of 400 share = 25 × 400 = Rs 10000

So, market value of 400 share = 21 × 400 = Rs 8400

( ii )

income = dividend%  × nominal value

            = 12 % × Rs 10000

            = Rs 1200

Again

( iii )

Income = return % × market value

Or, return % = $\dfrac{income}{market value}$

                    = $\dfrac{1200}{8400}$

                    = 14.2 %

Hence,

( i ) Total invested is Rs 10000

( ii ) Total income is Rs 1200

( iii ) Return % is 14.2 %  Answer