A company declares a dividend of 11.2% to all its share-holders. If its ₹ 60 share is available in the market at a premium of 25%, how much should Rakesh invest, in buying the shares of this company, in order to have an annual income of ₹ 1,680?

Let man invest ₹ x

Market value = ₹ 60 + $\dfrac{25}{100} \times 60$ = ₹ 60 + ₹ 15 = ₹ 75

∴ No. of shares = $\dfrac{x}{75}$

We know that,

Annual income = No. of shares × Rate of div. × N.V. of 1 share

$\Rightarrow 1680 = \dfrac{x}{75} \times \dfrac{11.2}{100} \times 60 \\[1em] \Rightarrow x = \dfrac{1680 \times 100 \times 75}{11.2 \times 60} \\[1em] \Rightarrow x = 18,750$

Hence, investment = ₹ 18,750.