Q6 of 55 Page 102

If the face value of both the shares is same, then which investment out of the following is more profitable?

Company A : dividend 16%, MV = Rs. 80, Company B : dividend 20%, MV = Rs. 120.

Let FV = Rs. 100


Company A:


We know that dividend per share =


∴ Dividend per share =


= Rs. 16


Income on Rs. 1 = = Rs. 0.20


Company B:


We know that dividend per share =


∴ Dividend per share =


= Rs. 20


Income on Rs. 1 = = Rs. 0.16


∴ Investment of company A is more profitable than company B.


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