The Board of Directors has now approved the decision to establish workshop facilities and renovate in $12$ of the stores. This will require the additional funding of $$1\mathrm{.}2$ million of capital expenditure as per the earlier NPV calculation. Gill has prepared three options for your review, which you are to submit to Pablo, the CFO:

Other funding options were considered, including an initial public offering $($IPO$),$ but the Board is not interested in pursuing any of them. According to Pablo, R$10$s relationship with its major bank is very good, and the bank has always treated R$10$ as a partner and increased its overdraft facility when R$10$ had any short$-$term financial needs. R$10$s Board Chair, Harry, is an advocate of venture capital funding as he has good networks with key people involved in this source of funding. He is keen to be involved in the next stage of the fund$-$acquisition process.

Using Appendix $3,$ advise Pablo $($R$10$s CFO$)$ on the most suitable funding option for R$10$ to raise the $$1\mathrm{.}2$ million needed for capital expenditure by evaluating each of the three $(3)$ funding options provided by Gill as below and recommend which option is the most suitable.

Bank overdraft

Medium$-$term bank loan

Issue shares to a venture capitalist.