Question

A man invested Rs 4800 in shares of a company which was paying 8% dividend at the time when a Rs. 100 shares costs Rs 160. Find
1. The annual income from the shares
2. Rate of interest he receives on his investment

Answer 1

Rate of interest Received is 5%

Step-by-step explanation:

Number of shares purchased = $\frac {Total\ Investment}{Market\ Value\ of\ one\ share}$

= $\frac {4800}{160}$= 30

Dividend per share = Rs. $100 \times \frac {8}{100}$ = Rs. 8

Number of shares purchased = Dividend per share $\times$ number of shares  

= Rs. 8 $\times$ 30 = Rs. 240

Rate of interest he gets on his investment = $\frac {Total\ income}{Investment} \times 100$

= $\frac {240}{4800} \times 100$ = 5%