Question

A man invests ₹1680 in buying shares of nominal value ₹24 and selling at 12% premium. The dividend on the shares is 15% per annum. Calculate:
1. The number of shares he buys;
2. The dividend he receives annually

Answer 1

Nominal value of 1 share = Rs. 24 Market value of 1 share= Rs24 + 12% of Rs. 24 = Rs. 24 + Rs. 2.88 = Rs. 26.88 Total investment = Rs1,680 ∴ No of shares purchased = 1,680/26.88=62.5 Nominal value of 62.5 shares = 62.5 × 24 = Rs. 1,500 Dividend = 15% of Rs. 1,500 = Rs. 225

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Answer 2

Given:

A man invests ₹1680 in buying shares of nominal value ₹24 and selling at 12% premium. The dividend on the shares is 15% per annum.

To find:

1. The number of shares he buys;

2. The dividend he receives annually

STEP BY STEP EXPLANATION:

Case 1:

Nominal value of 1 shares = ₹ 24

Market value of 1 shares = ₹ 24 + 12% of ₹ 24

= ₹ 24 + ₹ 2.88 = ₹ 26.88

Total investment = ₹ 1680

∴ No of Shares purchase = $\frac{1680}{26.88}$= 62.5

CASE 2:

Nominal value of 62.5 shares = 62.5 × 24 = ₹ 1,500

Dividend = 15% of ₹ 1,500

= ₹ 225

Hence verified !