Question $3$

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Bon Scott received $$500,000$ in settlement of a lawsuit recently.$$ Having no need for the cash right now he decides to invest all of it in one of two investments.

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$1.$ A $$500,000$ Kelowna Municipal Bond.$$ The bond pays interest at $7\%$ and matures in $10$ years.

$2.$ With the $$500,000,$ Bon will be able to purchase $25,000$ common shares of Enbridge, a Canadian public company.$$ Shares of Enbridge pay an annual dividend of $$1\mathrm{.}00$ per share. These are eligible dividends.

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Bon has current other income to put any additional income in the $33\%$ federal tax bracket and the $14\%$ provincial tax bracket.$$ The provincial dividend tax credit on eligible dividends is $1/3$ of the gross up$.$

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Required: Calculate the annual after tax cash from each of the investments.

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