2. Carling Ltd is a manufacturer of industrial drills. It has CIM earmarked for capital investment in the current year and the Board has identified two projects (each requiring an initial outlay of LIM) from which it will choose. The company's capital structure at present is: Ordinary shares 596 10% Preference shares Debentures Total capital The two rival projects have anticipated costs and income flows as follows: Project 1 Project 2 '000 '000 Cost 1000 1000 Income - Year 1 600 100 Year 2 200 150 Year 3 750 Year 4 250 450 Year 5 350 150 Year 6 200 200 Total income 1750 1800 (a) The Board is considering funding the investment by either a IM shares issue or a IM 10% debenture issue. You are asked to explain which method you would choose