Mr verma invested ₹18000 on ₹100 shares at a discount of ₹25 paying 12% dividend. At the end of the year, he sells the shares at a discount of ₹10. Find his rate of return.
Answer & explanation
Correct answer: option 2
The correct answer is option (2) : 36%
M.V of share of $₹100 = ₹ (100-25)=₹75$
Given cost of investment $=₹18000$
∴ No. of shares bought $=\frac{₹18000}{₹75}= 240$
Dividend on 1 share of ₹100 = 12% of ₹100 = ₹12
Dividend on 240 shares of ₹100 = ₹ (12× 240) = ₹ 2880
Given that Mr Verma sold the shares at a discount of ₹10 i.e at ₹(100- 10)= ₹90
So, profit on 1 share = ₹(90- 75) = ₹ 15
Profit on 240 shares =$ ₹ (15× 240)= ₹3600$
∴ Total return $= ₹ 2880 + ₹ 3600= ₹ 6480$
SO, rate of return $=\frac{6480}{18000}×100$%= 36%