a man invests equal amounts of money in two companies A and B.Company A pays a dividend of 15% and its ₹100 shares are available at 20% discount.The shares of company B has a nominal value of ₹25 and are available at 20% premium.If at the end of one year,the man gets equal dividends from both the companies,find the rate of dividend paid by company B.
Answers
Answer:
Company A: Company B:
NV=100 NV=25
MV=80 MV=25+20/100*25=30
d%=15%
Let sum invested in both companies be x.
Dividend of company A=Dividend of company B
100*x/80*15/100=25*x/30*d/100
The dividend rate of company B=7.5%
Investment= Investment
Let,
Number of shares of company A be x
Number of shares of company B be y
MV Company of A × No. of Shares=MV Company of B × No. Shares
80×x=30×y
x/y=30/80
x/y=3/8
As we know,
D= (FV × Shares× D) /100
D=(100×x×15) /100
D=15x -------1
D=(25×y×d) /100
D=y/4d ------2
Therefore, On putting eq 1 and 2 together we get
y/4d=15x
D=15x/y×4
D=45/2
D=22.5%