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Mathematics

₹ 25 shares of a company are selling at ₹ 20. If the company is paying a dividend of 12%, then the rate of return is :

  1. 10%

  2. 18%

  3. 15%

  4. 12%

Shares & Dividends

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Answer

Given,

Face Value = ₹ 25

Market Value = ₹ 20

Dividend rate = 12%

Let the rate of return be x%,

By formula,

Rate of dividend × N.V. = Profit (return) % × M.V.

∴12100×25=x100×20⇒12×25=20x⇒x=30020⇒x=15%\therefore \dfrac{12}{100} \times 25 = \dfrac{\text{x}}{100} \times 20\\[1em] \Rightarrow 12 \times 25 = 20x \\[1em] \Rightarrow \text{x} = \dfrac{300}{20}\\[1em] \Rightarrow \text{x} = 15\%

∴ Rate of return = 15%.

Hence, Option 3 is the correct option.

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