Charles Zhang, the owner of a small moving company, has decided that economic conditions are perfect for him to expand his business. Such an expansion will require him to buy five new moving trucks at a total cost of $250,000. Mr. Zhang’s company has $8,000 in cash and a $45,000 line of credit at the bank. It is a small company, so it does not have the option of issuing public debt, and Mr. Zhang is not comfortable mortgaging his family home to buy the trucks. Describe two ways Mr. Zhang can acquire the trucks. Discuss the advantages and disadvantages of each.
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