1.

Which is the better investment:16% Rs. 100 shares at 80 or 20% Rs.100 shares at 120?

Answer»

1st case

16% Rs.100 shares at 80 means;

Market value of 1 share = Rs. 80

Nominal value of 1 share = Rs. 100

Dividend = 16%

Income on Rs. 80 = 16% of Rs. 100 = Rs. 16

Income on Rs. 1 = 16/80=Rs.0.20

2nd case

20% Rs. 100 shares at 120 means;

Market value of 1 share = Rs. 120

Nominal value of 1 share = Rs. 100

Dividend = 20%

Income on Rs. 120 = 20% of Rs. 100 = Rs. 20

Income on Rs. 1 = 20/120=Rs.0.17

Then 16% Rs. 100 shares at 80 is better investment.



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