Amit Kumar invests ₹ 36,000 in buying ₹ 100 shares at ₹ 20 premium. The dividend is 15% per annum. Find :

(i) the number of shares he buys;

(ii) his yearly dividend;

(iii) the percentage return on his investment.

Give your answer correct to the nearest whole number.

Given,

Investment = ₹ 36,000

Face Value = ₹ 100

Premium = ₹ 20

Market Value = Face value + Premium = ₹ 100 + ₹ 20 = ₹ 120

Dividend Rate = 15%

(i) By formula,

Number of shares = $\dfrac{\text{Investment}}{\text{Market value of each share}} = \dfrac{36000}{120}$ = 300

Hence, Amit buys 300 shares.

(ii) By formula,

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

= $300 \times \dfrac{15}{100} \times 100$

= ₹ 4,500.

Hence, Amit's yearly dividend is ₹ 4,500.

(iii) By formula,

Percentage return = $\dfrac{\text{Income}}{\text{Investment}} \times 100\%$

= $\dfrac{4500}{36000} \times 100\%$

= 12.5% ≈ 13%.

Hence, the percentage return on investment equals to 13%.