An Investor Bought 100 Shares of Copier Corp

Essay

An investor bought 100 shares of Copier Corp. on margin for $85 a share. The firm paid an annual dividend of $4 a share; the margin requirement was 60 percent with an interest rate of 8 percent on borrowed funds, and commissions on the purchase and sale were $75. The price of the stock rose to $120 in one year.
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a. What is the percentage earned on the investment if the stock is bought for cash (i.e., the investor did not use margin)?
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b. What is the percentage earned on the investment if the stock is bought on margin?