The Board of Balls & All, a listed company, needs to raise more funds in order to purchase a major competitor. Most board members are relatively nave in relation to financial matters and quite uncertain. One suggests undertaking a bank bill facility with their commercial bank. Another suggests a longer term fixed loan from the bank.

i. Which option should Ball & All undertake to fund the acquisition?

ii. What principle would be applied here?

iii. Why should this be the optimum choice for Balls & All?