Ram purchased 100 shares of M/s. T Ltd, a listed company, @ ₹750/- per share on May 2, 2024. M/s T Ltd. declared 40% & 50% dividend on September 15, 2024 and on March 15, 2025 respectively. Market value of share of T

CS Professional · Corporate Restructuring, Valuation and Insolvency · PYQS · June 2025
Ram purchased 100 shares of M/s. T Ltd, a listed company, @ ₹750/- per share on May 2, 2024. M/s T Ltd. declared 40% & 50% dividend on September 15, 2024 and on March 15, 2025 respectively. Market value of share of T Ltd. on May 2, 2025 is ₹1000/- per share. Calculate the return of equity investment in T Ltd. (face value per share is ₹10/-)

Answer & Explanation:

Return on equity investment = [Cash Flow (dividend) + closing market price - opening market price] / opening market price Cash dividend on September 15, 2024 @ 40% = 40% of ₹10/- = ₹4/-; Cash dividend on March 15, 2025 @ 50% = 50% of ₹10/- = ₹5/-; Total Dividend Received = ₹4 + ₹5 = ₹9/- Opening Price (Purchase Price) = ₹750/- Closing Price (Market Value on May 2, 2025) = ₹1000/- So, return on equity investment = [{₹9} + {₹1000 - ₹750}] / ₹750 = [₹9 + ₹250] / ₹750 = ₹259 / ₹750 = 0.345333... or 34.53%

Topics: Valuation

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