J, B. Wands has $14,000 to invest. He lives in Saskatchewan and has other income of $40,000

Question:

J, B. Wands has $14,000 to invest. He lives in Saskatchewan and has other income of $40,000 for the year. A current bond issue is paying 6 percent, while a popular share issue offers a 5 percent dividend return.
a. Calculate the better return on an after tax basis (assume 35% marginal rate on bonds and 17.5% on shares). What is the after tax yield?
b. What other factors should be considered?

Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...

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