A dividend of 10% in a company on 500 000 ordinary shares of N 1 nominal value has been declared, How much will a shareholder receive if he has 200 shares?

Question 144 of 523

A dividend of 10% in a company on 500 000 ordinary shares of N 1 nominal value has been declared, How much will a shareholder receive if he has 200 shares?

A. N 500 000
B. N 50 000
C. N200
D. N 20

Correct Answer: D

Explanation

To determine how much a shareholder will receive from a declared dividend, we need to follow a few steps. Let's break it down step-by-step. Step 1: Understand the Dividend Declaration The company has declared a dividend of 10% on its ordinary shares. This means that for every share held, the shareholder will receive 10% of the nominal value of that share. Step 2: Identify the Nominal Value of the Shares The nominal value of each ordinary share is given as N 1. This is the value assigned to each share by the company, and it is used to calculate the dividend. Step 3: Calculate the Dividend per Share To find out how much dividend is paid per share, we calculate 10% of the nominal value: [ \text{Dividend per share} = \text{Nominal value} \times \text{Dividend rate} ] [ \text{Dividend per share} = N 1 \times 10\% = N 1 \times 0.10 = N 0.10 ] Step 4: Calculate the Total Dividend for the Shareholder Now, we need to find out how much the shareholder with 200 shares will receive. We multiply the dividend per share by the number of shares the shareholder owns: [ \text{Total dividend} = \text{Dividend per share} \times \text{Number of shares} ] [ \text{Total dividend} = N 0.10 \times 200 = N 20 ] Conclusion The shareholder with 200 shares will receive N 20 in total from the declared dividend. Explanation of the Options Now, let's analyze the options provided:

A. N 500,000: This option is incorrect because it does not relate to the number of shares owned by the shareholder. It seems to be a total dividend for all shares, not for the individual shareholder.
B. N 50,000: This option is also incorrect. It may be a miscalculation based on an incorrect assumption about the number of shares or the dividend rate.
C. N 200: This option is incorrect. It seems to be based on a misunderstanding of the dividend calculation. The shareholder does not receive N 200; instead, they receive N 20.
D. N 20: This is the correct option. It accurately reflects the total dividend received by the shareholder for their 200 shares.

Revision Summary

A dividend of 10% means shareholders receive 10% of the nominal value of their shares.
The nominal value of each share is N 1, leading to a dividend of N 0.10 per share.
For 200 shares, the total dividend is calculated as N 0.10 × 200 = N 20.
The correct answer is D. N 20, as it accurately represents the total dividend for the shareholder.