6)

Jayson Hopper is faced with the decision of investing a $100,000 inheritance in

Canada Savings Bonds or using it to purchase preferred shares of a Canadian

corporation.

The interest rate on the Canada Savings Bonds has been set at 3.5%, while the

current dividend yield on the preferred shares is 4.5%.

Because of risk considerations, Jayson requires that the preferred shares provide

an after-tax return, which is at least 2% greater than that on the Canada Savings

bonds.

Jayson's federal tax rate is 29% and provincial tax rate is 11.16%

Required:

For Canada Savings Bonds For Preferred Shares