A company with 500 shares of nominal value ₹ 120 declares an annual dividend of 15%. Calculate:
annual income of Mr. Sharma who holds 80 shares of the company. If the return percent of Mr. Sharma from his shares is 10%, find the market value of each share.
Topic: Shares, dividend and return
Answer
Nominal value of each share = ₹120 Dividend rate = 15% Mr. Sharma holds 80 shares.
Dividend per share:
= 15% of ₹120
= ₹18
Annual income:
= 80 × ₹18
= ₹1,440
Return percent = 10%
Formula:
Return % = Annual income / Investment × 100
10 = 1440 / Investment × 100
Investment = 1440 × 100 / 10
= ₹14,400
Market value per share:
= Investment / Number of shares
= ₹14,400 / 80
= ₹180
Answer:
Annual income = ₹1,440 Market value of each share = ₹180.
The dividend income is based on nominal value, while the return percentage is based on the actual investment. The 10% return therefore determines the total investment, which is divided by 80 to obtain the market value per share.