An investor buys 2000 shares at $8 per share, using a margin loan to finance 40% of the purchase. The share pays annual dividends of $0.10 per share, and a margin loan can be obtained at an annual interest cost of 8%. Determine what return on invested capital the investor will realise if the price of the share increases to $10.40 within six months. What is the annualised rate of return on this transaction?
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