Question

200 shares with face value Rs. 10 of Infosys Ltd. Purchased at Rs. 200 each. Dividend received is 20%. Shares sold for at Rs. 250 each. Calculate return on equity

Answer 1

The return on equity is 242%.

How the return on equity is computed:

Purchase of Infosys Ltd. 200 shares at Rs. 10 = Rs. 2,000

Dividend received = 20% of Rs. 2,000 = Rs. 400

Sale of 200 shares at Rs. 250 = Rs. 50,000

Return on equity in dollars = Rs. 48,400 (Rs. 50,000 + Rs. 400 - Rs. 2,000)

Return on equity in percentages = 242% (Rs. 48,400/Rs. 2,000 x 100)