Question

A mutual fund X owns 0.5% of the total stock of company Y. In one particular year, Company Y announces annual profits of $12,000,000, and decides to pay dividends to its shareholders at a rate of 15% of its annual profits. How much will mutual fund X receive in the form of dividends from Company Y? Give your answer in dollars without the dollar sign or commas.

Answer 1

The amount mutual fund X will receive is;

`9000\text{ dollars}`

Step-by-step explanation:

Given;

Total profit P = $12,000,000

Rate of dividends = 15% of P

Total amount of dividends that goes to shareholders is;

`\begin{gathered} (15)/(100)*\text{ \$12,000,000} \\ =\text{ \$1,800,000} \end{gathered}`

A mutual fund X owns 0.5% of the total stock of company Y.

From the total amount of dividends that goes to shareholders, the amount that goes to mutual fund X is;

`\begin{gathered} 0.5\text{\% of \$1,800,00} \\ =(0.5)/(100)*1,800,000 \\ =9000\text{ dollars} \end{gathered}`

Therefore, the amount mutual fund X will receive is;

`9000\text{ dollars}`