Tropical Fruit Juice Pty Ltd is a fruit juice producer which sells organic unpasteurised cold pressed fruit juices to various supermarkets across Australia. The company has four directors and shareholders Melissa, Joan, Sally and Giovanni. Melissa, Joan, Sally and Giovanni own equal shares in the company.

Tropical Fruit Juice Pty Ltd needs to raise $90,000 to buy equipment and large stainless steel vats in which to store freshly pressed fruit juice, but the directors are unsure how companies raise finance and which form of finance is optimal. Melissa, Joan, Sally and Giovanni do not want to dilute their ownership or power in the company but a potential investor, Ronaldo, has lucrative connections with major Australian supermarkets. Ronaldo wants to buy 30% of the shares in the company for $90,000. The company also has the option to obtain a secured loan from Reef Bank with interest of 3% per annum payable with a floating charge placed on the companys assets. The security document allows the bank to appoint a receiver on default. The loan from Reef Bank must be repaid over a four-year period with periodic payments every three months.

Explain how Tropical Fruit Juice Pty Ltd can raise debt finance and equity finance, and compare the advantages and disadvantages of the debt and equity finance for the company and its existing members.