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A company with 4000 shares of nominal value of Rs. 110 declares annual dividend of 15%. Calculate :

(i) the total amount of dividend paid by the company,

(ii) the annual income of Shah Rukh who holds 88 shares in the company,

(iii) if he received only 10% on his investment, find the price Shah Rukh paid for each share. (2008)

Answer:

Number of shares = 4000

Nominal (face) value of each share = Rs. 110

Total face value of 4000 shares = Rs. 110 x 4000

= Rs, 440000

Rate of annual dividend = 15%

(i) Amount of dividend = (440000 x 15)/ 100

= Rs 66000

(ii) Number of shares, Shah Rukh has = 88

Face value of 88 shares = 88 x 110

= Rs 9680

Annual dividend = (9680 x 15)/ 100

= Rs 1452

(iii) Rate of annual income on his investment = 10%

His investment = (1452 x 100)/ 10

= Rs 14520

Market value of each share = 14520/88

= Rs 165

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