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