A man invests 20,020 in buying shares of
N.V. 26 at 10% premium. The dividend on
the shares is 15% per annum. Calculate :
(i) the number of shares he buys.
(ii) the dividend he receives annually.
(iii) the rate of interest he gets on his money.
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STEP EXPLANATION:
Total Investment = 20020
FV of 1 share = 26
MV of 1 share = 26(1 + 10/100) = 26(11/10) = 28.60
Dividend on one share = (15/100)*26 = 3.90
(1) Number of shares bought
= 20020/28.60 = 700
(2) Annual Dividend = 700*3.90
= Rs 2730
(3) Rate of Interest = (2730/20020)*100
= 13.6 %
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