A man bought ₹200 shares of a company at 25% premium. If he received a return of 5% on his investment. Find the :

For one share:

Face value = ₹200

Premium = 25% of Face value

= $\frac{25}{100} \times 200$

= ₹50

(a) By formula,

M.V. = Face value + Premium

= ₹200 + ₹50

= ₹250.

Hence, market Value = ₹ 250.

(b) Given,

Return = 5%

Return on 1 share = $\frac{5}{100} \times 250$

= ₹ 12.50

By formula,

Dividend earned = No. of shares × rate of dividend × F.V. of 1 share

Let rate of dividend be r%.

Substituting values we get :

⇒ 12.50 = 1 × $\frac{r}{100}$ × 200

⇒ r = $\frac{12.50}{200} \times 100$

⇒ r = 6.25%

Hence, dividend percent = 6.25%.

(c) By formula,

Annual dividend = Number of shares × Dividend% × Face value of 1 share

⇒ 1000 = Number of shares × $\frac{6.25}{100}$ × 200

⇒ 1000 = Number of shares × 12.5

⇒ Number of shares = $\frac{1000}{12.5}$ = 80.

Hence, number of shares purchased = 80.