Question

Prashant bought 50 shares of FV Rs. 100, having MV Rs. 180. Company gave 40% dividend on the shares. Find the rate of return on investment.

Answer 1

Here, Number of shares = 50, FV = Rs. 100,

MV = Rs. 180, rate of dividend = 40%

∴ Sum invested = Number of shares × MV

= 50 × 180

= Rs. 9000

Dividend per share = 40% of FV

= 40/100 × 100

Dividend = Rs. 40

∴ Total dividend on 50 shares = 50 × 40

= Rs. 2000

Now, rate of return = \(\frac{\text{Total dividend}}{\text{Sum invested}} \times 100\)

\(= \frac{2000}{9000} \times 100\)

= 22.2%

∴ Rate of return on investment is 22.2%.