Amit invests ₹36000 in buying ₹100 shares at ₹20 premium. The dividend is 15% per annum. Find:

(i) the number of shares he buys

(ii) his yearly dividend

(iii) the percentage return on his investment.

Nominal Value per share = ₹100

Rate of Dividend = 15%

Total Investment = ₹36000

As Amit buys the shares at ₹20 premium,

Market Value per share = ₹100 + ₹20 = ₹120

∴ Number of shares he buys

$= \dfrac{\text{Total Investment}}{\text{MV per share}} \\[0.7em] = \dfrac{36000}{120} \\[0.5em] = \bold{300}$

Annual Dividend = No. of shares x Rate of Dividend x Nominal Value per share

$= 300 \times \dfrac{15}{100} \times 100 \\[0.5em] = \bold{₹4500}$

$\% \text{Return} = \Big(\dfrac{\text{Annual Inc.}}{\text{Investment}} \times 100\Big)\% \\[0.5em] = \Big(\dfrac{4500}{36000} \times 100\Big) \% \\[0.5em] = \Big(\dfrac{450000}{36000} \Big) \% \\[0.5em] = \Big(\dfrac{25}{2} \Big) \% \\[0.5em] = \bold{12.5\%}$