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Mathematics

Find the market price of 12%, ₹ 25 shares of a company which pays a dividend of ₹ 1,875 on an investment of ₹ 20,000.

Shares & Dividends

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Answer

Given,

Face Value = ₹ 25

Rate of dividend = 12%

Annual dividend = ₹ 1,875

Investment = ₹ 20,000

By formula,

Income from each share = Rate of div. × N.V. of 1 share

= 12100×25\dfrac{12}{100} \times 25

= ₹ 3.

Number of shares bought=Total annual incomeAnnual income from 1 share=18753=625.Market price per share=InvestmentNumber of shares=20000625=32.\text{Number of shares bought} = \dfrac{\text{Total annual income}}{\text{Annual income from 1 share} }\\[1em] = \dfrac{1875}{3} \\[1em] = 625. \\[1em] \text {Market price per share} = \dfrac{\text{Investment}}{\text{Number of shares}} \\[1em] =\dfrac{20000}{625} \\[1em] = ₹ 32.

Hence, the market price per share is ₹ 32.

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