Barry Notting Has Just Received an Inheritance of $50,000 in Cash

Barry Notting has just received an inheritance of $50,000 in cash. As he is a very successful professional, he does not need the funds currently. Given this, he intends to invest the funds in preferred shares which pay an eligible dividend of 5.5 percent. As he intends to purchase a new home in five years, he plans to liquidate his investment at the end of that period. He is considering two alternatives:
Alternative 1 - Invest the $50,000 outside of his RRSP.
Alternative 2 - Invest the $50,000 in his RRSP (he has sufficient unused deduction room)and apply the deduction against his professional income. The tax savings resulting from the RRSP deduction would be invested outside of his RRSP in the 5.5 percent preferred shares.
Barry's marginal tax rate on ordinary income is 43 percent, while his marginal rate on eligible dividends is 26 percent. Ignoring the effect of any reinvestment of the dividends received, determine which alternative will provide more funds for Barry's home purchase.