The correct answer is D. Common stock equity.
Maturity matching is a financial management strategy that aims to match the maturities of assets and liabilities. This helps to reduce risk by ensuring that the company has the cash flow to meet its obligations as they come due.
Common stock equity is the most appropriate form of financing for a new capital investment in plant and equipment because it has the longest maturity. This means that the company will not have to repay the investment for many years, which gives it time to generate the cash flow needed to make the payments.
Trade credit, banknotes, and accounts payable are all forms of short-term financing. This means that the company would have to repay these loans within a year or less. This would be too risky for a new capital investment, as the company may not have the cash flow to make the payments.
In addition, common stock equity is a more flexible form of financing than other options. This is because the company can issue new shares of stock as needed to raise capital. This flexibility is important for a new capital investment, as the company may not know how much money it will need until the project is underway.
Overall, common stock equity is the most appropriate form of financing for a new capital investment in plant and equipment because it has the longest maturity, is more flexible, and is less risky than other options.