Eric comes to you asking for your advice. He wishes to invest $20,000 either in a debt security or in an equity investment. His choices are as shown below:

(1) Mockingbird Corporation bond, annual coupon rate of 7.50%.

(2) City of Colby general obligation bond, coupon rate of 6.00%.

(3) Robin Corporation, 7.50% preferred stock (produces qualified dividend income).

These alternatives are believed to carry comparable risk. Assuming that Eric is in the 35% marginal tax bracket, which investment alternative could be expected to produce the superior annual after-tax return?