What will be expected after tax rate of return

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You have recently won $100,000 in a lottery and are currently trying to decide whether or not to invest the money into preferred shares of Z Ltd., a Canadian company, which have a dividend yield of 6% and are currently selling at $40.

You anticipate the preferred shares will be selling at $44 at the end of the year.

Applicable federal and provincial tax rates are 29% and 11.16% respectively.

Required:

Problem 1: If you purchase the shares, what will be your expected after tax rate of return from the investment for the first year after you sell the shares?

Reference no: EM133009712

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