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Mathematics

A man bought ₹200 shares of a company at 25% premium. If he received a return of 5% on his investment. Find the :

(a) market value

(b) dividend percent declared

(c) number of shares purchased, if annual dividend is ₹1,000.

Shares & Dividends

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Answer

For one share:

Face value = ₹200

Premium = 25% of Face value

= 25100×200\dfrac{25}{100} \times 200

= ₹50

(a) By formula,

M.V. = Face value + Premium

= ₹200 + ₹50

= ₹250.

Hence, market Value = ₹ 250.

(b) Given,

Return = 5%

Return on 1 share = 5100×250\dfrac{5}{100} \times 250

= ₹ 12.50

By formula,

Dividend earned = No. of shares × rate of dividend × F.V. of 1 share

Let rate of dividend be r%.

Substituting values we get :

⇒ 12.50 = 1 × r100\dfrac{r}{100} × 200

⇒ r = 12.50200×100\dfrac{12.50}{200} \times 100

⇒ r = 6.25%

Hence, dividend percent = 6.25%.

(c) By formula,

Annual dividend = Number of shares × Dividend% × Face value of 1 share

⇒ 1000 = Number of shares × 6.25100\dfrac{6.25}{100} × 200

⇒ 1000 = Number of shares × 12.5

⇒ Number of shares = 100012.5\dfrac{1000}{12.5} = 80.

Hence, number of shares purchased = 80.

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