Question

Mr. Vijay purchased 50 shares of face value Rs. 100 and market value of share is Rs.120.The company had announced dividend of 10%. Find the rate of return on investment​

Answer 1

Step-by-step explanation:

FV=Rs.100

MV=Rs.80

Number of shares purchased =50

Sum invested = Number of shares purchased × MV of each share =50×80=Rs.4,000

Dividend received on each share =20 % of FV of each share =20% of Rs. 100 =10020×100=Rs.20

Total dividend received = Number of shares purchased × Dividend received on each share =50×20=Rs.1000

∴ Rate of return on investment =Sum−investedTotal−dividend−received×100% =40001000×100% =25%

Thus, the rate of return on investment is 25%