Case study number three, chapter four: the scenario is your company has $5 million in short-term investments. The short-term investments are to be used to expand your facilities. Due to regulatory challenges, though, the expansion will be delayed for 36 months or three years. Your company has asked you to evaluate which of the following investment options they can consider. Assuming that your company is a C Corp with a 21% corporate tax rate here in the US, choose one of these three investment options:

1. Invest in Corporate Bonds yielding 12% per annum pre-tax.

2. Invest in non-dividend paying corporate equities expected to earn 12% per annum pre-tax.

3. Invest in preferred stock of other corporations paying a 10% dividend per year. Dividend will be eligible for the 50% Corporate Dividends Received Deduction.