Ameer invests Rs.24,200 in buying Rs.100 shares of a company avilable at a premium of `10%`. If the company pays a dividend of `15%`, then find the number of shares bought by Ameer, and the rate of return on his investment.
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Face value of each share = Rs.100
The shares are available at a permium of `10%`, i.e., `10%` of 100 – Rs.10.
Market value of each share = Rs.(100 + 10) = Rs.110
Money invested = Rs.24,200
`”Number of shares bought”=(“Total investment”)/(“Market value of each share”)`
`=(24200)/(110)=220`
`”Dividend paid “=15%`
`”Annual income from each share “=15%” of 100 = Rs. 15″`
`rArr” Annual income from 220 shares”=”Rs.”(220xx15)=”Rs.”3300`
`”The rate of return on his investment “=(“Annual income”)/(“Investment”)xx100%`
`=(3300)/(24200)xx100%`
`=(150)/(11)%=13(7)/(11)%`
`therefore” Ameer gets a return of “13(7)/(11)%” per annum on his investment”.`