Palisha Co is a five$-$year old private company specialising in the manufacture of a range of health drinks, foods and supplements aimed at the fitness market. At present, their biggest customers are health food shops and fitness centres. However, now that their brand has become established, the wealthy owners, who also manage the business, are convinced that sales could be increased dramatically through the opening of an internet shop. They are currently considering how best to fund the expansion of the business. Funds would be needed to set up the website, expand manufacturing at the factory, and employ more staff to deal with administration, dispatch and delivery of the web orders. It is estimated that K$2$ million would be needed for the expansion. At present, the market value of the company$$s equity is K$4$ million and the company has loans of K$05$ million, repayable in six months$$ time. The company also has cash built up from retained earnings of K$13$ million.

Required:

$($a$)$ Outline THREE appropriate sources of medium$/$long$-$term finance that may be available to Palisha Co to finance its expansion. Presume that government grants and leasing are NOT appropriate.

$($b$)$ Discuss FOUR factors that Palisha Co should take into account when deciding on the mix of debt and equity finance.