Financial Planning Exercise 5

Calculating return on investment Which of the following would offer the best return on investment? Assume that you buy $8,000 in stock in all three cases, and ignore interest and transaction costs in all your calculations.

A) Buy a stock at $70 without margin and sell it 1 year later at $100.

B) Buy a stock at $60 with 50% margin and sell it 1 year later at $75.

C) Buy a stock at $70 with 75% margin and sell it 1 year later at $75.

Which Alternative offers the best return on the investment.