Dividend rate from totals: A company has 50,000 shares of par value $10 each. If the total annual dividend distributed is $62,500, determine the percentage rate of dividend paid on the share capital.

Introduction / Context: This question checks the ability to convert a total dividend amount into a dividend rate on paid-up (par) share capital. When a company declares a cash dividend, the rate is the dividend amount divided by the total nominal capital, expressed as a percentage.

Given Data / Assumptions:

• Total number of shares = 50,000.
• Par value per share = $10.
• Total dividend paid = $62,500.

Concept / Approach: Dividend rate (%) = (Total dividend / Total par capital) * 100. Total par capital equals number of shares multiplied by par value per share.

Step-by-Step Solution:

Verification / Alternative check: A quick mental check: 10% of $500,000 is $50,000; 12.5% would be $62,500, which matches.

Why Other Options Are Wrong: 12% and 10% understate the rate; 13.75% and 8.5% are not consistent with the exact ratio $62,500 / $500,000.

Common Pitfalls: Using market capitalization instead of par capital; misplacing the decimal when converting to percent.

Final Answer: 12.5%