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Question 2 a) Shane bought 100 shares of stock for $30.00 per share on 70% margin. Assume Shane holds the stock for one year and

Question 2

a) Shane bought 100 shares of stock for $30.00 per share on 70% margin. Assume Shane holds the stock for one year and that his interest costs will be $45 over the holding period. Shane also received dividends amounting to $0.30 per share. Ignoring commissions, what is his percentage return on invested capital if he sells his 100 shares for $34 a share? (6 marks)

b) If you invest $2,000 at the beginning of each year for five years and you earn 7% interest compounded annually, how much will your investment be worth at the end of the fifth year? (3 marks)

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