You have just received a bequest of $2,000 from an aunt and you have decided to invest the money in shares of Electronic Recycling Inc., a company that is listed on the Toronto Stock Exchange. Electronic Recycling Inc. (ERI) has common shares; cumulative preferred shares; noncumulative, convertible preferred shares; and noncumulative preferred shares. The common shares are trading at $40.00 and currently have been paying a dividend of $2.40 per share. The cumulative preferred shares are selling at $50.00 and have a stated dividend of $3.50. The convertible preferred shares are selling for $78.50 and are convertible at the rate of 2 common for 1 preferred; the dividend rate is $5.30. The noncumulative preferred shares are trading at $25.00 and have a dividend rate of $1.55.
Required
Evaluate each of the four different shares as an investment opportunity. After performing your analysis, select which shares you will buy and explain your choice.