Quick Questions
65
1. Find 65% of $700 x 700 = $455
100
115
2. Increase $160 by 15% x 160 = $184
100
3. The cost of a lawnmower is $550. If the inflation
rate is 3%, find the future value of the
lawnmower after 4 years
PV = 550
FV = PV(1 + r)n
r = 0.03
= 550(1 + 0.03)4
n=4
= $619.03
FV = ?
Year 12 Standard Maths Topic 4
INVESTMENTS,
DEPRECIATION & LOANS
Shares
• Shares represent part-ownership in a company
• Dividends are the returns that shareholders receive
for investing in the company
• Dividend yields are the returns as a percentage of
the current market value of the share
Dividend
Dividend Yield = Market Value x 100
Shares
• A stockbroker buys and sells shares for people
• Brokerage is the fee charged by a stockbroker to
manage your shares
• Face value: the original price you paid for a share
• Market value: the current value of the share on the
stock market
Shares & Dividends
Small Group Activity
• Cooper decided to purchase shares in a company
that sells second-hand phones
• He bought 2500 shares in the company for
$5.60 each
• He was charged a brokerage fee of 6.2 cents
per share
• A dividend of 36 cents per share was paid last
month
• Later, Cooper sold the shares for $5.75 each
Show all necessary calculations
Shares & Dividends
Small Group Activity
1. What is meant by the term “face value” of a
share? The original price paid for a share
2. What was the face value of each of Cooper’s
shares? $5.60
3. What was the cost of the Cooper’s shares? (do
not include brokerage fee) $5.60 x 2500 = $14 000
4. What is meant by the term “brokerage fee”?
The fee charged by a stockbroker to manage
your shares
Shares & Dividends
Small Group Activity
5. How much did Cooper pay for brokerage when he
purchased the shares? 0.062 x 2500 = $155
6. What was the total cost of Cooper’s shares
(including brokerage)? $14 000 + 155 = $14 155
7. What is meant by the term “market value” of a
share? The current value of the share on the
stock market
8. What was the market value of each of Cooper’s
shares when he was ready to sell them? $5.75
Shares & Dividends
Small Group Activity
9. What is meant by the term “dividend”?
Returns that shareholders receive for investing
in the company
10. What was the dividend per share that Cooper
received? 36 c
11. What were the total dividends that Cooper
received for all 2500 shares? 0.36 x 2500 = $900
12. What is meant by the term “dividend yield”?
The returns as a percentage of the current
market value of the share
Shares & Dividends
Small Group Activity
13. Write down the formula for dividend yield
Dividend
Dividend Yield = x 100
Market Value
14. Calculate the dividend yield on the shares (2 dp)
0.36
Dividend Yield = x 100
5.75
= 6.26%
Shares & Dividends
Small Group Activity
15. When Cooper sold the shares, he was again
charged a brokerage fee of 6.2 cents per share.
(a) How much income had he earnt when he sold his
sssssshares? (Include his dividend payment)
($5.75 x 2500) + 900 – 155 = $15 120
(b) What was his total profit from the shares?
$15 120 - 14 155 = $965
Shares & Dividends
Small Group Activity
16. Do you always make a profit when you buy and sell
shares? Explain your answer.
No
You would lose money if the market value was
less than the face value when you went to sell
the shares
Examples include: Target, Just Jeans, Victoria’s
Secret
Example 1
Lucy bought 500 shares at $6.80 each. Brokerage
fees were $33.
What was the total cost of purchasing the shares?
Cost of shares = 500 x 6.80
= $3400
Brokerage fee = $33
∴ Total = 3400 + 33
= $3433
Example 2
Christine sells 1200 shares for $1.36 each.
How much money does she obtain, if her broker
charges a fee of $29?
Sale of shares = 1200 x 1.36
= $1632
Brokerage = $29
∴ Total = 1632 - 29
= $1603
Example 3
Maccas shares are worth $3.30 on the market today.
The company paid a dividend of 29 cents.
What is the dividend yield (2 dp)?
Dividend
Dividend Yield = x 100
Market Value
0.29
= x 100
3.30
= 8.79%
Maccas dividends are 8.79% of it’s share value
Example 4
A company makes a profit of $87 500. It distributes this to
the shareholders. There are 1 250 000 shares in the
company.
87 500
(a) Calculate the dividend per share 1 250 000 = 0.07
= 7c / share
(b) What will Brad’s dividend be if he owns 25 000
shares? 0.07 x 25 000 = $1750
(c) Find the dividend yield if the shares have a current
market value of $2.80 Dividend
Dividend Yield = x 100
Market Value
0.07
= x 100
2.80
= 2.5%
Past HSC Question
1526 x $8.75 = $13 352.50
Dividend
Dividend Yield = x 100
Market Value
1086.20
= x 100
13 352.50
= 8%
Activity
Exercise 1E (p.25)
Questions: 2 – b
4–b Remember to mark
your work
7
9
11* – b
12* – a c
