Sichula and Sons Ltd are considering expanding their operations. Several alternative strategies are being discussed for financing this expansion. The latest balance sheet of the company as at 31 December 2015 is as follows: Sichula and Sons Ltd Balance sheet at 31 December 2015 Non-Current assets Land and buildings 40,000 Plant and equipment 90,000 130,000 Current assets Inventory 50,000 Debtors 40,000 Cash 15.000 95,000 Creditors: amounts falling due within one year 25,000 Net current assets 70,000 Total assets less current liabilities 200,000 Creditors: amounts falling due within one year: 12% loan repayable 2021 90.000 10,000 Share capital and reserves: 8% cumulative preference shares of $1 each 30,000 Ordinary shares of $1 each 50,000 Income statement 30,000 110,000 The board of directors has identified the following possible alternative ways of obtaining the additional $50,000 required during the following year, (a) Issue additional ordinary shares (6) Issue additional 8 per cent preference shares. (c) Raise an additional long-term loan at 12 per cent. Discuss the company's existing capital structure in terms of its gearing, and examine the advantages and disadvantages of each alternative method of financing its expansion plan