A man buys 120 shares of face value Rs. 50 each at a market price of Rs. 80 per share. The company declares a 15% dividend (on face value). How much dividend does he receive in a year? What is his approximate percentage return on the actual money invested?

Solution

ATQ,

Face value of each share = Rs. 50 Number of shares = 120 Dividend received: Dividend rate = 15% of face value Dividend per share = 15% of 50 = (15/100) × 50 = 7.5 Total dividend = 120 × 7.5 = 900 So, he receives Rs. 900 as dividend. Percentage return on investment: Market price per share = Rs. 80 Total amount invested = 120 × 80 = 9600 Return (dividend) = 900 Percentage return = (Return / Investment) × 100 = (900 / 9600) × 100 = (90000 / 9600) = 9.375% or 9% approx. So, percentage return ≈ 9.%