A man has a choice to invest in hundred-rupee shares of two firms at ₹ 120 or at ₹ 132. The first firm pays a dividend of 5% per annum and the second firm pays a dividend of 6% per annum. Find :

(i) which company is giving a better return.

(ii) if a man invests ₹26,400 with each firm, how much will be the difference between the annual returns from the two firms ?

(i) First company's dividend = 5% and second company's = 6%.

∴ Second company is giving a better return.

(ii) No. of shares of first company = $\dfrac{26400}{120} = 220$

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

= 220 × $\dfrac{5}{100} \times 100$

= ₹ 1,100.

No. of shares of second company = $\dfrac{26400}{132} = 200$

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

= 200 × $\dfrac{6}{100} \times 100$

= ₹ 1,200.

Difference between annual returns = ₹ 1200 - ₹ 1100 = ₹ 100.

Hence, difference between annual returns of two firms = ₹ 100.