Question

Mr. Santosh purchased 25 shares of a company of FV Rs 50 at MC Rs 56. The company declared a 9% dividend. After receiving dividend, he sold the shares at MV Rs 52. He Paid brokerage at the rate of 0.5% for the transaction. What is his profit or loss in this transaction?

Answer 1

Hint: We know the face value of the company and the dividend percentage. Hence we can calculate the total amount earned by 25 shares with this dividend. Now we know that Mr. Santosh purchased 25 shares at MV = 56 and sold at MV = 52. Now since MV at the time of selling is less than the market value at the time of buying shares the transaction is a loss. Hence we will calculate the total loss. Similarly ono each transaction we will calculate the brokerage amount with a given brokerage percentage. Hence the final amount Left with Mr. Santosh is Dividend – Loss through selling shares – brokerage

Complete step by step answer:
Now we are given that MR Santosh purchased 25 Shares of a company at Rs 56.
Hence he brought 25 shares for 25 × 56 = 1400 Rs
Now he sold the shares at MV 52
Hence he sold shares at 25 × 52 = 1300 Rs
Hence total loss after selling shares = 100 Rs ……………….. (1)
Now we know that divided is calculated by face value of company and face value of company is 50 Rs
Hence dividend per share =
$\begin{align}
  & \dfrac{9}{100}\times 50 \\
 & =\dfrac{9}{2} \\
 & =4.5 \\
\end{align}$
Hence dividend per share is 4.5 Rs.
Now the total dividend earned for 25 shares is 4.5 × 25 = 112.5. ………(2)
Now let us calculate brokerage.
Now brokerage is paid for each transaction.
Hence total brokerage is the brokerage for buying shares + brokerage for selling shares.
Total brokerage =
$\begin{align}
  & 25\times 56\times \dfrac{0.5}{100}+25\times 52\times \dfrac{0.5}{100} \\
 & =14\times 0.5+13\times 0.5 \\
 & =0.5\left( 14+13 \right) \\
 & =0.5\left( 27 \right) \\
 & =13.5 \\
\end{align}$
Hence the brokerage is 13.5 Rs.
Now total Money remaining with Mr. Santosh is
= Dividend – Loss through selling shares – Brokerage
= 112.5 – 100 – 13.5
= - 1
Hence Mr. Santosh made a loss of 1 Rs in the whole transaction.

Note:
 Now note that here Dividend is calculated on the face value of the company and no the market value of the company and Brokerage is counted on the total transaction.