A resident of Alberta has taxable income from employment of $170,000. This individual is considering three investments

Question:

A resident of Alberta has taxable income from employment of $170,000. This individual is considering three investments of equal risk and wishes to determine the after-tax income for each:

a. $57,000 worth of bonds with a coupon rate of 5 percent.

b. 250 shares of stock that will pay a dividend at the end of the year of $25 per share.

c. 500 shares of another stock that is expected to increase in value by $15 per share during the year.

Coupon
A coupon or coupon payment is the annual interest rate paid on a bond, expressed as a percentage of the face value and paid from issue date until maturity. Coupons are usually referred to in terms of the coupon rate (the sum of coupons paid in a... 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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