Rs. 50 shares of a company are quoted at a discount of 10%. Find the rate of dividend given by the company, the return on the investment on these shares being 20 per cent.
Nominal value of 1 share = Rs. 50
Market value of 1 share = Rs. 50 − 10% of Rs. 50
= Rs. 50 – Rs. 5 = Rs. 45
Profit % on investment = 20%
Then profit on 1 share = 20% of Rs. 45 = Rs. 9
∴ Dividend % = (9/50) ×100%=18% Ans.
