Jason and KerriConsalvo, both in their50's, have $41,000 to invest and plan to retire in 10 years. They are considering two investments. The first is a utility company common stock that costs $41 per share and pays dividends of $2.05 per share per year(a 5% dividendyield). Note that these dividends will be taxed at the same rates that apply tolong-term capital gains. The Consalvos do not expect the value of this stock to increase. The other investment under consideration is a highly rated corporate bond that currently sells for $1,000 and pays annual interest at a rate of 6.0%, or $60.00 per $1,000 invested. After 10years, these bonds will be repaid atpar, or $1,000 per $1,000 invested. Assume that the Consalvos keep the income from their investments but do not reinvest it(they keep the cash in anon-interest-bearing bankaccount). Theywill, however, need to pay income taxes on their investment income. If they buy thestock, they will sell it after 10 years. If they buy thebonds, in 10 years they will get back the amount they invested. The Consalvos are in the 33% tax bracket.

a. How many shares of the stock can the Consalvosbuy?

b. How much will they receive after taxes each year in dividend income if they buy thestock?

c. What is the total amount they would have from their original $41,000 if they purchased the stock and all went asplanned?

d. How much will they receive after taxes each year in interest if they purchase thebonds?

e. What is the total amount they would have from their original $41,000 if they purchased the bonds and all went asplanned?

f. Based only on your calculations and ignoring other riskfactors, should they buy the stock or thebonds?

a. The number of shares of the stock that the Consalvos can buy is

1000

1000 shares. (Round to the nearest wholenumber.)

b. If they buy thestock, the amount they will receive each year in dividend income after taxes is $

nothing

. (Round to the nearestcent.)

c. The total amount they would have from their original $41,000 if they purchased the stock and all went as planned is $

nothing

. (Round to the nearestcent.)

d. If they purchase thebonds, the amount they will receive each year in interest after taxes is $

nothing

. (Round to the nearestcent.)

e. The total amount they would have from their original $41,000 if they purchased the bonds and all went as planned is $

nothing

. (Round to the nearestcent.)

f. Based only on your calculations and ignoring other riskfactors, the Consalvos should buy the bond

. (Select from thedrop-down menu.)