Lenova Digital is considering acquiring a new line of products to sell to their retailer customers. The product is an in-home gaming simulator system which includes the latest gaming chair, gaming PC with a large monitor, and a virtual reality headset. The cost per system is $6,000. The supplier requires a minimum order of 20 systems, which means the total investment in the new line of products will be $120,000. it is expected that payment will need to be made in October 2023.

Due to the large amount of investment required, the owners of Digital Field Day have determined that the financing of this purchase could be undertaken in October 2023 by either a bank loan or an additional share issue to the owners. Lenova Digital have asked you to provide them with advice regarding these financing options in preparation for Christmas.

a. Identify which cash flow activity within the cash flow statement would increase as a result of the funds received by the bank loan or share issue. Word limit: a total of 50 words. Any response beyond the word limit will not be marked.

b. Provide Lenova Digital with a comparison of both options that includes consideration of any repayments, the effects on cash flows and the associated risk. Note no calculations are required. Word limit: a total of 200 words. Any response beyond the word limit will not be marked.

c. Identify which option is more likely to result in a higher net increase in cash flows within Lenova Digitals cash flow statement for the month of October 2023 and explain why.Word limit: a total of 100 words. Any response beyond the word limit will not be marked.