Question

Mr Sharma receives an annual income of Rs. 900 in buying Rs. 50 shares selling at Rs. 80. If the dividend declared is 20%, find the : a) Amount invested by Mr. Sharma, b). Percentage return on his investment.

Answer 1

TD = n × r × FV /100
900= n × 20 × 50/100
n = 900×100/(20×50)
n = 90 shares
TI = MV × n
TI = 80 × 90=₹7200
ROR = 900×100/7200
= 12.5%

Answer 2

Answer:

a) I = Rs.7200

b) P = 12.5%

Step-by-step explanation:

Given : Mr Sharma receives an annual income of Rs. 900 in buying Rs. 50 shares selling at Rs. 80. If the dividend declared is 20%.

To find :

a) Amount invested by Mr. Sharma,

b) Percentage return on his investment.

Solution :

Let the number of shares be 'x',

Nominal value is Rs.50

Market value is Rs.80

The dividend on a share is r% of NV, i.e., Rs r per annum.

Dividend = 20% of 50x

Dividend = $\frac{20}{100}\times 50x$

Dividend = 10x

Annual income is Rs.900.

So, $10x=900$

$x=\frac{900}{10}$

$x=90$

a) Total investment is given by,

$I=90\times 80=7200$

b) Percentage return on his investment is given by,

$P=\frac{900}{7200}\times 100$

$P=12.5\%$