Murali holds 300 shares of Rs20 each. The company issues shares in the ratio 3:5. The company declared a dividend of 15 % on the and enlarged capital. What is the average rate of return on his investment?
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Given:
Murali holds 300 shares of Rs. 20each. the company issues in the ratio 3:5. the company declares a dividend of 15% on the enlarged capital.
To find:
What is the average rate of return on his investment?
Solution:
From given, we have,
Murali holds 300 shares of Rs. 20each.
The value of one share = Rs 20
A dividend of 15% on the enlarged capital
No. of shares = 15% of 300 = 15/100 × 300 = 45
Original capital = (No. of shares) × (value of 1 share)
∴ Original capital = 45 × 20 = 900
dividend = 15% on capital = 15% × 900 = 15/100 × 900 = 135
∴ The average rate of return on investment = Rs 135
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