# CLASS-10SHARES & DIVIDEND - PROBLEM & SOLUTION

PROBLEM & SOLUTION -

Example.1) Find the market value of –

(i) 250, \$100 shares at a premium of \$20

(ii) 140, \$25 shares at a discount of \$5

Ans.)  (i) Market value of 1 share = \$(100 + 20) = \$120

Market value of 250 shares = \$(120 X 250) = \$30000  (Ans.)

(ii) Market value of 1 share = \$(25 – 5) = \$20

Market value of 140 shares = \$(140 X 25) = \$3500   (Ans.)

Example.2) Find the annual income from 750, \$25 shares, paying 8% dividend

Ans.)  Face value of 1 share = \$25

Annual income from 1 share = 8% of \$25

8

= \$(25 X ------) = \$2

100

Annual income from 750 shares = \$(750 X 2) = \$1500    (Ans.)

Example.3) Salman buys \$50 shares of face value \$100 available at \$132

(i) What is the investment ?

(ii) If the divided is 8%, what will be his annual income ?

(iii) If he wants to increase his annual income by \$160, how many extra shares should he buy ?

Ans.)  Market value of 1 share = \$132

Market value of 50 shares = \$(132 X 50) = \$6600

So, Salman’s total investment = \$6600 …………………………..(i)    (Ans.)

Face value of each share = \$100

Face value of 50 shares = \$(100 X 50) = \$5000

Salman’s annual income = 8% of \$5000

8

= \$5000 X ------- = \$400 ………………..(ii)   (Ans.)

100

Income from each share = \$8

Extra income required = \$160

160

So, extra number shares to be bought = \$ ------- = 20 …………(iii)  (Ans.)

8

Example.4) A man invests \$10800 on \$100 shares at \$90. If the company pays him 20% dividend, find –

(i) The number of shares he buys

(ii) His total annual dividend

(iii) His percentage return on the shares

Ans.) Total investment = \$10800

Market value of each share = \$90

\$10800

Number of shares bought = ----------- = 120 …………………….(i)   (Ans.)

\$90

Face value of each share = \$100

Face value of 120 shares = \$(120 X 100) = \$12000

Man’s annual dividend = 20% of \$12000

20

= ------ X \$12000 = \$2400 …………………….(ii)     (Ans.)

100

Total investment of the man = \$10800

His annual return = \$2400

Man’s annual percentage return

2400

= (--------- X 100)% = 22.22% …………………..(iii)    (Ans.)

10800

Example.5) Mr. Patric invested \$5200 on \$100  shares at a discount of \$20 paying 8%. At the end of one year, he sells the share at a premium of \$20. Find – (i) The annul dividend

(ii) The total annual profit earned including his dividend.

Ans.)  Total investment = \$5200

Market value of each share = \$(100 – 20) = \$80.

\$5200

Number of shares bought = --------- 65

\$80

Face value of 65 shares = \$(65 X 100)  = \$6500

Mr. Patrick’s annual dividend = 8% of \$6500

8

= ------- X 6500 = 65 X 8 = \$520 …………….(i)    (Ans.)

100

Selling price of each share = \$(100 + 20) = \$120

Selling price of 65 shares = \$(120 X 65) = \$7800

Total annual profit including dividend = \$[(7800 – 5200) + 520]

= \$3120 ……………..(ii)    (Ans.)

Example.6) Devid invests \$4500 in 10%, \$10 shares at \$15. He sells the shares when the price rises to \$30 and invests the proceeds in 12%, \$100 shares at \$125.

Calculate – (i) The sale proceeds

(ii) The number of \$125 shares he buys

(iii) The change in his annual income from dividend.

Ans.) Total investment = \$4500

Market value of each share = \$15

\$4500

Number of shares bought = --------- = 300

\$15

Selling price of each shares = \$30

Sale proceeds = \$(300 X 30) = \$9000 ……………………(i)      (Ans.)

Market value of each share = \$125

Total investment = \$9000

\$9000

Number of shares he buys = ---------- = 72 ………………….(ii)     (Ans.)

\$125

Face value of 300 shares of 1st kind = \$(300 X 10) = \$3000

10

His annual income from shares of 1st kind = \$(3000 X -------) = \$300

100

Face value of 72 shares of 2nd kind = \$(72 X 100) = \$7200

12

His annual income from shares of 2nd kind = \$(7200 X -------) = \$864

100

Change in income = \$(864 – 240) = \$624 ……………..(iii)        (Ans.)

Example.7) A man invested a sum of money in \$100 shares, paying 20% dividend and quoted at 20% premium. If his annual dividend is \$540, calculate –

(i) His total investment

(ii) The rate of return on his investment.

Ans.)  We have –

Annual dividend on 1 share = 20% of \$100 = \$20

Total Annual Dividend        \$540

Number of shares bought = -------------------- = --------27

Dividend on 1 share          \$20

Market value of 1 share = \$120

His total investment = \$(120 X 27) = \$3240……………….(i)       (Ans.)

His total investment = \$3240

His annual dividend = \$540

540                   100

Rate of return = (------- X 100)% = ------- %

3240                   6

= 16.66 % = 16.7%  …………….(ii)    (Ans.)

Example.8) A man invested \$4500 in 20%, \$100 shares quoted at \$125. When the market value of these shares rose to \$140, he sold some shares, just enough to raise \$840. Calculate –

(i) The number of shares he still holds

(ii) The dividend due to him on these remaining shares

Total investment         4500

Ans.) Number of shares bought = ------------------- = ------- = 36

Market value of 1 share     125

Total sale proceeds             840

Number of shares sold = ------------------------- = -------- = 6

New market value of 1 share       140

Number of shares he still in hold = (36 – 6) = 30 shares ………...(i)  (Ans.)

Annual dividend on remaining each share = 20% of \$100 = \$20

Annual dividend on remaining 30 shares = \$(20 X 30)

= \$600 …………....(ii)  (Ans.)