Consider the following types of investments and explain whether they are debt or equity instruments. Provide one or two reasons for each as to why a company might choose this investment.
(a) 10,000 Class A voting shares in One Corp. with a market value of$225,500. The shares pay a 4% annual dividend.
(b) A loan to Two Inc. for $2 million with 8% interest payable semi-annually and the principal to be repaid in 10 years
(c) A loan to Three Company for $500,000 that is due in five years, with 5% interest due annually. The loan can be converted into 5,000 common shares of Three Company at any time during the five-year loan period.