$2.$ An investor is planning to execute a margin transaction for two years with Security A$,$ where the initial margin is $40\%.$ The investor aims to achieve a minimum expected annual after$-$tax rate of return of $15\%$ on their equity investment, taking into account income tax rate of $25\%.$ The current and future prices of Security A $($two years from now$)$ are given in the table below:

Current market price $30\mathrm{.}0$

Future price $-$ scenario I $($Prob$.=20\%)21\mathrm{.}0$

Future price $-$ scenario II $($Prob$.=30\%)32\mathrm{.}0$

Future price $-$ scenario III $($Prob$.=40\%)45\mathrm{.}0$

Future price $-$ scenario IV $($Prob$.=10\%)75\mathrm{.}0$

$$ What should the maximum annual interest rate on borrowed funds be to meet the required return? Assume that the borrowed funds, along with accrued interest, must be repaid wher the investor sells the security. $[$NB$!$ Please provide your answer in percentage terms with two decimal places. For example, if the answer is $50\mathrm{.}1\%,$ type $50\mathrm{.}10.]$An investor is planning to execute a margin transaction for two years with

Security A$,$ where the initial margin is $40\%.$ The investor aims to achieve a

minimum expected annual after$-$tax rate of return of $15\%$ on their equity

investment, taking into account income tax rate of $25\%.$ The current and future

prices of Security A $($two years from now$)$ are given in the table below:

What should the maximum annual interest rate on borrowed funds be to

meet the required return? Assume that the borrowed funds, along with

accrued interest, must be repaid when the investor sells the security.

$[$NB$!$ Please provide your answer in percentage terms with two decimal places. For

example, if the answer is $50\mathrm{.}1\%,$ type $50\mathrm{.}10.]$

Answer: