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Question

John invests ₹7,200 in MojoRojo Inc, paying 10% per annum when its ₹20 shares can be bought for ₹16. Find his annual income, and percentage return on his investment.

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Solution

The total investment made by John = ₹7200
Nominal Value of the share = ₹20
Market Value of the share = ₹16
No of shares bought = 720016 = 450
Total Income = (Number of shares) × (Market Value of each share) × (rate of dividend)

450×20×10 =900
So, % of return on Investment is:-

(Total incomeTotal Investment)×100 = (9007200)×100 = 12.5 %


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