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(Solved): Select three short-term financing instruments and three long-term financing instruments. Please expl ...



Select three short-term financing instruments and three long-term financing instruments. Please explain them and describe how they work. When explaining the long-term financing instruments, address the concept of tax savings in terms of how they are achieved and why they occur when using one instrument and not another. Support your answer with sources/evidence.

Imagine yourself as a financial manager in a company, and you are requested to provide a financial report including the calculation of the current market rate of return from the investor's perspective for each of the four investment options, taking into consideration the followings:

Common stocks available for investment are:

2,500,000 shares of common stock, with a par balance of $1 per share.

The current market value of the common share is $24.43 per share.

Annual earnings per share $1.95.

Bonds available for investment

$1,750,000 bonds (A) with an interest of 6.25%, with a current market value of $104 per bond (price of $104 per $100).

$2,250,000 Notes B, with an interest rate of 5.75%, with a current market value of $94.50 (price $94.50 per $100 note).

The corporate tax rate is 35%.

Preferred shares available for investment

950,000 outstanding preferred shares with a par value of $10 with a preferential dividend payment set at 5%. The current market value is $15.63 per Preferred Share



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