An investor has £200,000 to invest and has to choose between three different investments:

• An investment in a £200,000 bond paying 5% interest per annum

• An investment in a new issue of preference shares with a par value issue price of 50 pence paying an annual dividend of 3 pence per share

• An investment in a new issue of ordinary shares with a par value issue price of 25 pence
paying an annual dividend of 2 pence per share. 

How much will each investment return to the investor? Which investment would be preferable on the assumption that the investor wishes to maximize income from investing the £200,000?