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1. 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 ?

A. Rs. 35.50

B. Rs. 40

C. Rs. 48

D. Rs. 52

Solution:

Dividend on 1 share
= Rs.

(\frac{10}{100} \times 50)

= Rs. 5
Rs. 12.50 is an income on an investment of Rs. 100
Rs. 5 is an income on an investment of :
= Rs.

(100 \times \frac{2}{25} \times 5)

= Rs. 40.
∴ Cost of 1 share = Rs. 40

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