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Mathematics

₹ 50 shares of a company are quoted at a discount of 10%. Find the rate of dividend given by the company, the return on the investment on these shares being 20 percent.

Shares & Dividends

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Answer

We know that,

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

Market value = ₹ 50 - ₹ 10100×50\dfrac{10}{100} \times 50 = ₹ 50 - ₹ 5 = ₹ 45.

Let rate of dividend be x%

⇒x100×50=20100×45⇒x=20×4550⇒x=18%\Rightarrow \dfrac{x}{100} \times 50 = \dfrac{20}{100} \times 45 \\[1em] \Rightarrow x = \dfrac{20 \times 45}{50} \\[1em] \Rightarrow x = 18\%

Hence, rate of dividend = 18%.

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