A man buys Rs. 50 shares in a company which pays 10% dividend. If the man gets 12.5% on his investment, at what price did he buy the shares?
Q1. A man buys Rs. 50 shares in a company which pays 10% dividend. If the man gets 12.5% on his investment, at what price did he buy the shares?
Answer: Rs. 40
Explanation: Annual dividend per share = 10% × Rs. 50 = Rs. 5; at 12.5% yield on investment, purchase price = 5/0.125 = Rs. 40.