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Mike Dunlap is considering a leveraged purchase of stock. Today, he can purchase 600 shares of Bingo Corporation stock for $30 per share. Since he

Mike Dunlap is considering a leveraged purchase of stock. Today, he can purchase 600 shares of Bingo Corporation stock for $30 per share. Since he has only $14,000 in cash, he would like to borrow the rest. Option 1 is to borrow $4000 from a brokerage firm at an annual interest rate of 15 percent.

What is his annualbefore-taxexpected rate of return?

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