A dividend of $13$ was declared on $₹ 100$ shares selling at a certain price. If the rate of return is $6.5$ ,calculate

(i) the market value of the shares

(ii) the amount to be invested to obtain an annual dividend of $₹ 3900$

$[4 M a r k s]$

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Solution

Given that Dividend $= 13 %$ ; N.V $= ₹ 100$ ; Rate of return $= 6.5 %$

i) $M.V \times Rate of Return = Dividend % \times N.V$
$[0.5 M a r k s]$

$M.V \times 6. 5 % = 13 % \times 100$

$M.V \times \frac{6.5}{100} = \frac{13}{100} \times 100$

$M.V = \frac{13}{6.5} \times 100 = ₹ 200$
$[1 M a r k]$

ii) $Dividend % = 13 %$ ; $N.V = 100$
Hence dividend on one share $= ₹ 13$
$[0.5 M a r k s]$

To obtain an annual income of $₹ 3900$ ;
We know
$Annual Income = Dividend on one share \times Number of shares$

$[0.5 M a r k s]$

$3900 = 13 \times Number of shares$
$Number of shares = \frac{6500}{13} = 300$

$[0.5 M a r k s]$

$M.V of one share = ₹ 200$ and $number of shares = 300$
Hence he will have to invest $200 \times 300 = ₹ 60, 000$
$[1 M a r k]$

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A dividend of 13 was declared on ₹100 shares selling at a certain price. If the rate of return is 6.5 ,calculate (i) the market value of the shares (ii) the amount to be invested to obtain an annual dividend of ₹3900 [4 Marks]

A dividend of $13$ was declared on $₹ 100$ shares selling at a certain price. If the rate of return is $6.5$ ,calculate

(i) the market value of the shares

(ii) the amount to be invested to obtain an annual dividend of $₹ 3900$

$[4 M a r k s]$