Mohan Lal invested ₹ 29,040 in 15%, ₹ 100 shares of a company quoted at a premium of 20%. Calculate :

(i) the number of shares bought by Mohan Lal;

(ii) his annual income from shares;

(iii) the percentage return on his investment.

Given,

Investment = ₹ 29,040

Face Value = ₹ 100

Premium Rate = 20%

Premium = $\dfrac{20}{100} \times 100$ = ₹ 20

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

Dividend Rate = 15%

(i) By formula,

Number of shares = $\dfrac{\text{Investment}}{\text{Market value of each share}} = \dfrac{29040}{120}$ = 242.

Hence, Mohan Lal bought 242 shares.

(ii) By formula,

Annual income = Number of shares × Rate of dividend × N.V. of 1 share

= $242 \times \dfrac{15}{100} \times 100$

= ₹ 3,630.

Hence, the annual income from shares is ₹ 3,630.

(iii) By formula,

$\text{Percentage return} = \dfrac{\text{Income}}{\text{Investment}} \times 100\%\\[1em] = \dfrac{3630}{29040} \times 100\% \\[1em] = 12.5\%.$

Hence, the percentage return on investment equals to 12.5%.