100 shares of FV Rupees 10 were purchased for MV Rupees 25. Company declared 20% dividend on the shares. Find (i) the sum invested(ii) dividend received (ii) rate of return.

Answer

(i) The sum invested is Rupees 2500.
(ii) Dividend received is Rupees 200.
(iii) Rate of return is 8%.

Explanation

FV = Rupees, MV = Rupees 25, Number of shares = 100
(i) The sum invested =MV xx number of shares
`= Rupees 25 xx 10= Rupees 250`
(ii) Dividend per share = FV `xx` rate of dividend
`= Rupees 10 xx ( 20)/( 100) = Rupees 2`
`:.` total dividend received = dividend per share `xx` number of shares
`= Rupees 2 xx 100 = Rupees 200`
(iii) Rate of return `= ( "dividend income ")/( "the sum invested") xx 100 = ( 200)/( 2500) xx 100 = 8%`