Question

A man buys Rs.20 shares paying 9% dividend. The man wants to have an interest of \[12\% \] on his money. The market value of each share is:
A) Rs. 12
B) Rs. 18
C) Rs. 15
D) Rs. 21

Answer 1

Hint:
Here we have to find the market value of each share. For that, we will find the dividend on each share. Here dividend on shares means a cash, reward or otherwise, the cash that a company gives to its shareholders. Then we will use a unitary method to solve this problem further using the given information to find the market value of each share.

Complete step by step solution:
We will first find the dividend on each share which will be equal to \[9\% \] of Rs. 20.
Therefore,
Dividend on each share \[ = 9\% \times Rs20\]
Converting the given percent in fraction, we get
Dividend on each share \[ = \dfrac{9}{{100}} \times Rs20\]
On multiplying the terms, we get
Dividend on each share \[ = Rs1.8\]
It is also given that the man wants to have an interest of \[12\% \] on his money.
Therefore, we can write this as;
If the income of man is Rs. 12, then the investment \[ = Rs100\]
We will use the unitary method now.
Therefore,
If the income of man is Rs.\[{\rm{1}}{\rm{.8}}\], then the investment \[ = Rs\left( {\dfrac{{100 \times 1.8}}{{12}}} \right)\]
On multiplying and dividing the terms, we get
\[ \Rightarrow \] If the income of man is Rs.\[{\rm{1}}{\rm{.8}}\], then the investment \[ = Rs15\]
Hence, the market value of each share is Rs. 15.

Thus, the correct option is option C.

Note:
To solve the problem we need to keep in mind what the term dividend means. Dividends are basically the part of profit or "cash in hand" which a company shares with its shareholders. There is no legal obligation for any company to pay any of the dividends to its shareholders. Percentage of dividend paid by any company is, in no way, any indication of the quality of the company. Just from dividend yield we can’t say whether a company is good or bad.