Question

Mr. X bought 500 shares out of 10,000 shares sold by a commercial bank. The bank earned some profit and distributed 14% of the net profit as a dividend in a year. If X received Rs 103,600 in the year, find the net profit of the bank.

Select one:
a. Rs 2,500,000
b. Rs 740,000
c. Rs 746,000
d. Rs 700,000

Answer 1

Using the information that Mr. X's dividend is 14% of the bank's net profit for his shares, we find that the bank's net profit does not match any of the options provided. We calculated the total dividend payout and derived the bank's net profit, which resulted in Rs 14,800,000, indicating a discrepancy in the question.

Step-by-step explanation:

To determine the net profit of the bank from the information provided, we use the amount of dividend Mr. X received and the percentage of shares he owns. Mr. X received Rs 103,600, which is 14% of the bank's net profit attributable to his shareholding. Since Mr. X owns 500 out of 10,000 shares, his ownership represents 5% of the total shares. To find the total dividend payout, we divide the dividend received by X's percentage of ownership, which gives us:

Rs 103,600 ÷ 0.05 = Rs 2,072,000

This amount is 14% of the bank's net profit. To find the net profit, we divide the total dividend payout by 14%, obtaining:

Rs 2,072,000 ÷ 0.14 = Rs 14,800,000

However, the options given in the question do not match this calculation, indicating a possible error in the question or the options provided. Given the options, none of them accurately reflects the calculated net profit based on the information provided.