If you invest $125 in a stock, borrowing 80 percent of the $125 at 20 percent...
If you invest $125 in a stock, borrowing 80 percent of the $125 at 20 percent interest, and the stock price rises by 40 percent, what is the return on your investment?
________ percent
Homework Answers
Investment =$125.
Borrowed =0.8*125 = 100.
Interest paid = 0.2*100 =20.
Total amount to be repaid = 100+20 =120.
Return on investment = 125*0.4 = 50.
Total amount received =125+50 =175.
Return = 175-125-20 = 30.
Return on investment=30/125 = 24%.
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