Question

Shri Shantilal has purchased 150 shares of FV Rs. 100, for MV of Rs.120. Company has paid dividend at 7%. Find the rate of return on his investment.

Answer 1

Here, FV = Rs. 100, MV = Rs.120 

Dividend = 7%, Number of shares = 150 

∴ Sum invested = Number of shares × MV 

= 150 × 120 

= Rs.18000 

Dividend per share = 7% of FV 

= (7/100) × 100 = Rs.7 

∴ Total dividend of 150 shares 

= 150 × 7 = Rs.1050

Now, return = (Total divident)/(Sum invested ) x 100

= (1050/18000) x 100 = 5.8/3% 

∴ Rate of return on investment is 5.83%.