Question

Ms. Sonia Rajput had 600 preference shares and 400 ordinary shares of Badbury Co.
of Rs 10 each. The company declared a 10 % annual dividend on the preference
shares and 12 % annual dividend on the ordinary shares. What was the total annual
dividend received by Ms. Rajput.

Answer 1

ANSWER :

• ❖ Ms. Sonia Rajput had 600 preference shares and 400 ordinary shares of Badbury Co. of Rs 10 each and the company declared a 10 % annual dividend on the preference shares and 12 % annual dividend on the ordinary shares; then the total annual dividend received by Ms. Rajput will be Rs. 1,080.

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SOLUTION :

❒ Given :-

• Number of preference shares = 600

• Number of ordinary shares = 400

• Nominal Value of each shares = Rs. 10

• Rate of annual dividend on preference shares = 10%

• Rate of annual dividend on ordinary shares = 12%

❒ To Calculate :-

• Total annual dividend received by Ms. Rajput = ?

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❒ Calculation :-

It is given that,

• Number of preference shares = 600

• Nominal Value of each share = Rs. 10

So,

• ✠ Total nominal value of the preference shares = No. of shares × Nominal Value of each share

➜ Total nominal value of the preference shares = 600 × Rs. 10

➜ Total nominal value of the preference shares = Rs. 6,000

Here,

• Annual dividend on preference shares will be paid at the rate of 10%.

Thus,

• ★ Annual dividend on preference shares = Total nominal value of shares × Rate of Dividend

⇒ Annual dividend on preference shares = Rs. 6,000 × 10%

⇒ Annual dividend on preference shares = Rs. (6,000 × $\sf{\dfrac{10}{100}}$)

⇒ Annual dividend on preference shares = Rs. 600

Again,

It is given that,

• Number of ordinary shares = 400

• Nominal Value of each share = Rs. 10

So,

• ✠ Total nominal value of the ordinary shares = No. of shares × Nominal Value of each share

➜ Total nominal value of the ordinary shares = 400 × Rs. 10

➜ Total nominal value of the ordinary shares = Rs. 4,000

Here,

• Annual dividend on ordinary shares will be paid at the rate of 12%.

Thus,

• ★ Annual dividend on ordinary shares = Total nominal value of shares × Rate of Dividend

⇒ Annual dividend on ordinary shares = Rs. 4,000 × 12%

⇒ Annual dividend on ordinary shares = Rs. (4,000 × $\sf{\dfrac{12}{100}}$)

⇒ Annual dividend on ordinary shares = Rs. 480

Now,

• ✪ Total annual dividend = Annual dividend on preference shares + Annual dividend on ordinary shares

➨ Total annual dividend = Rs. 600 + Rs. 480

∴ Total annual dividend = Rs. 1,080