You have $20,000 to invest in the shares of Iomega Incorporated. The stock is currently selling at a price of $40 per share. You estimate that the stock will be selling at a price of $60 in one year. Since Iomega is a growth stock, no cash dividends are expected over the next year. The rate on margin loans is currently 7%.

What would be the expected return on the investment assuming that you used the maximum allowable margin of 50%?

At what price would you get a margin call assuming the maintenance margin was 30%?

Construct two data tables that compare the return on investment for a margin trade and a trade with no margin for ending stock prices that range from $10 to $70 in increments of $5.