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Mathematics

Which is the better investment:

(12%, ₹ 20 shares at ₹ 16) or (15%, ₹ 20 shares at ₹ 24)?

Shares & Dividends

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Answer

Since,

Profit% on M.V. = Dividend% on N.V.

In first case,

P% on ₹ 16 = 12% on ₹ 20

⇒P100×16=12100×20⇒P×16=240⇒P=24016=15%.\Rightarrow \dfrac{P}{100} \times 16 = \dfrac{12}{100} \times 20 \\[1em] \Rightarrow P \times 16 = 240 \\[1em] \Rightarrow P = \dfrac{240}{16} = 15\%.

In second case,

P% on ₹ 24 = 15% on ₹ 20

⇒P100×24=15100×20⇒P×24=15×20⇒P=30024=12.5%.\Rightarrow \dfrac{P}{100} \times 24 = \dfrac{15}{100} \times 20 \\[1em] \Rightarrow P \times 24 = 15 \times 20 \\[1em] \Rightarrow P = \dfrac{300}{24} = 12.5\%.

Hence, 12% ₹ 20 shares at ₹ 16 is the better investment.

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