Exhibit 12-1 Mark Would Like to Purchase a Stock Priced at $70.The

Multiple Choice

Exhibit 12-1
Mark would like to purchase a stock priced at $70.The stock is not expected to pay any dividends in the coming year.He can either put up the entire amount and purchase the stock, or borrow $35 from his brokerage firm at an annual interest rate of 12 percent and put up the remainder.Mark thinks he can sell the stock for $100 after one year.
-Refer to Exhibit 12-1.If Mark does not borrow any money from his brokerage firm, what is the estimated return on the stock?

A) 30.00 percent
B) 42.86 percent
C) 30.00 percent
D) 42.86 percent
E) none of the above