Which financing method should be used from Section A for this company and provide a brief explanation of why?

Section A

1. Long-term bonds

2. Common stock: nonrights

3. Preferred stock: (nonconvertible)

4. Factoring (Factoring is the selling of a firm's accounts receivable.)

Company

Since Timberland Power & Light, a major electric utility is organized as a holding company, the Securities and Exchange Commission must approve all of its securities issues. Such approval is automatc if the company stays with conventional norms for the public utility industry. Reasonable norms call for long-term debt in the range of 45 percent to 65 percent, preferred stock in the range of 0 to 15 percent and common equity in the range of 25 to 45 percent. Timberland currently has total assets of $1.5 billion financia as follows: $900 million debt, $75 million preferred stock, and $525 million common equity. The cmpany plans to raise an additional $37 million at this time.