Margin Call Question... guess, equation, investor, question

Colum

Using the equation to find the margin call price:
[(P)*(1  Margin %)] / (1  maintenance margin %)
Why do I plug in .555 for the margin % instead of .444 when the data is:
An investor opens a margin account with an initial deposit of $5,000. He then
purchases 300 shares of a stock at $30. His margin account has a maintenance
margin requirement of 30%.
I guess my question is: Why is the margin % 5000/9000 rather than 4000/9000??

LPoulin133

I don’t know what others do, but I equate the following values. I hate to remember long equations like the one above which I can derive logically in 15 seconds.
Lets say current stock price is x where he gets a margin call
300x  4000 = .30 x 300x
(4000 is the money that investor borrowed, so his equity today is 300 x  4000 which is only 30% of the total equity)

ba736

I think I was just confused because of this:
Say a stock is $100 and the margin requirement is 40%, that means you only need to pay $40 of the $100. I had it backwards and thought that the margin only covered $40 (40%) of it so that you had to pay $60.
i think my brains about to die from studying