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Karan invests Rs. 18,000 by buying Rs. 1...

Karan invests Rs. 18,000 by buying Rs. 100 shares of a company available at a discount of Rs. 10. If the company pays a dividend of 10%, then find the number of shares bought by Karan, and the rate of return on his investment.

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Total investment `= Rs. 18,000`
Face value of each share `= Rs. 100`
The shares are available at a discount of Rs. `10`.
Market value of each share `=100-10= Rs. 90`.
Number of share bought `=("Total investment")/("Market value of each share")=18,000/90=200`
`implies` Number of shares bought by Karan `=200`
Rate of dividend `=10%`
His annual income from each share `=10% (100)= Rs. 10`
`implies` His annual income from 200 shares `=200 (10)= Rs. 2000`
`implies` The rate of return on his investment `=("Annual income")/("Total investment") (100) =2000/18,000 (100)`
`=100/9 %=11 1/9%`
`:.` Karan receives a return of `11 1/9 %` per ammum on his investment.
Alternative solution :
We have, `FVxx` Rate of dividend `=MVxx` Rate of return.
`100xx10%=90xx` Rate of return
`implies` Rate of return `=11 (1)/(9) %`.
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