Kabir bought 120 shares of a company with nominal value ₹100, available at a premium of ₹25. Find :
(a) the money invested by Kabir in buying these shares.
(b) the rate of dividend, if he received ₹ 1,080 as dividend from these shares after one year.
(c) his rate of return.
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(a) Given,
Number of shares = 120
Nominal value = ₹ 100
Premium = ₹ 25
Market price per share = ₹100 + ₹25 = ₹125
Total money invested by Kabir = Number of shares × Market price per share
= 120 × 125 = ₹ 15,000.
Hence, the money invested by Kabir = ₹ 15,000.
(b) Given,
Total dividend = ₹ 1080
Let rate of dividend be R.
By formula,
Dividend = No. of shares × $\frac{\text{Rate of dividend}}{100}$ × N.V. of share
1080 = 120 × $\frac{R}{100}$ × 100
1080 = 120 × R
R = $\frac{1080}{120}$
R = 9%.
Hence, rate of dividend = 9%.
(c) Given,
Investment = ₹ 15,000
Rate of return = $\frac{\text{Total dividend}}{\text{Total investment}}$ x 100
= $\frac{1080}{15000} \times 100$
= 7.2%.
Hence, rate of return = 7.2%.