A person purchased Rs. 100 shares of a company at a 20% premium by investing Rs. 14,400. If the company announces a 5% dividend at the end of the year, what amount will he receive as dividend?

Explanation

The shares are bought at Rs. 120 each (Rs. 100 face value + 20% premium). With an investment of Rs. 14,400, the number of shares purchased = 14,400 ÷ 120 = 120 shares. The dividend is 5% on the face value, so dividend per share = 5% of Rs. 100 = Rs. 5. Therefore, total dividend received = 120 shares × Rs. 5 = Rs. 600.