Mathematics

A man invests ₹ 4,500 in shares of a company which is paying 7.5% dividend. If ₹ 100 shares are available at a discount of 10%, find :
(i) number of shares he purchases;
(ii) his annual income.

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Given,

Investment = ₹ 4,500

Face Value = ₹ 100

Discount Rate = 10%

Discount = $\dfrac{10}{100} \times 100 = ₹\ 10$

Market Value = Face Value - Discount = ₹ 90.

Dividend Rate = 7.5%

(i) By formula,

Number of shares = $\dfrac{\text{Investment}}{\text{Market value of each share}} = \dfrac{4500}{90} = 50$

Hence, the number of shares purchased equals to 50.

(ii) By formula,

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

$\therefore \text{Annual dividend} = 50 \times \dfrac{7.5}{100} \times 100$

= 50 × 7.5

= ₹ 375

Hence, his annual income is ₹ 375.

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