A man bought ₹200 shares of a company at 25% premium. He received a return of 5% on his investment. Find:
(a) the market value of one share.
(b) the dividend percentage declared.
(c) the number of shares purchased if the annual dividend is ₹1,000.
Face value of one share = ₹200
Premium = 25% of ₹200
⇒ Premium = \frac{25}{100} × ₹200
⇒ Premium = ₹50
(a) Market value = Face value + Premium
⇒ Market value = ₹200 + ₹50
⇒ Market value = ₹250
(b) Return on one share = 5% of ₹250
⇒ Return = \frac{5}{100} × ₹250
⇒ Return = ₹12.50
Let the dividend rate be r%.
₹12.50 = r% of ₹200
⇒ 12.50 = \frac{\mathrm{r}}{100} × 200
⇒ r = 6.25%
(c) Dividend on one share = ₹12.50
Number of shares = \frac{₹1,000}{₹12.50}
⇒ Number of shares = 80
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