A person invests Rs 10000 in 10% 100 shares of a company available at a premium of 25. Find his rate of return.

8%

The correct answer is option (1) : 8%

Cost of investment $= ₹10000$

Market value of one share $=₹(100+25)=₹125$

∴ No. of shares bought $=\frac{₹10000}{₹125}= 80$

Total dividend  earned by person $=80 ×10$% of ₹100= ₹800

So, rate of return $=\frac{800}{10000} ×100$%= 8%