Question

The face value of a share is Rs.100. Aakash purchased 25 shares when its market value was Rs. 70. In the year, the company declared 20% divided. Find the rate of return Aakash got on his investment.

Answer 1

Hint: Use the formula, \[Rate{\text{ }}of{\text{ }}return = \dfrac{{{\text{Total dividend}}}}{{{\text{Sum invested}}}} \times 100\].

Complete step-by-step answer:
It has been given that,

Face value of a share=Rs. 100

Market value of a share=Rs. 750
So, Total amount invested=25×70=Rs. 1750
Dividend=20%
Therefore total dividend on 25 shares=20×25=Rs. 1500
Now,

$ Rate{\text{ }}of{\text{ }}return = \dfrac{{{\text{Total dividend}}}}{{{\text{Sum invested}}}} \times 100 \\
   = \dfrac{{500}}{{1750}} \times 100 \\
   = 28.57\% \\
$
Therefore Aakash gets 28.57% return on his investment.

Note: One must be able to recognise which is face value and which one is market value.
Face value= Nominal price
Market value= price at which shares are bought.