(All apart of sane question)

Alternative A: The effective annual cost is _ %? (round two decimal places)

Alternative B: The effective annual rate is _%?

(round two decimal places)

Alternative C: The effective annual rate is _%?

(round two decimal places)

Hand-to-Mouth (H2M) is currently cash-constrained and must make a decision about whether to delay paying one of its suppliers, or take out a loan. They owe the supplier $10,500 with terms of 2/10 Net 40, so the supplier will give them a 2% discount if they pay by today (when the discount period expires) Alternatively, they can pay the full $10,500 in one month when the invoice is due H2M is considering three options Alterative A: Forgo the discount on its trade credit agreement, wait and pay the full $10.500 in one month. Alternative B: Borrow the money needed to pay its supplier today from Bank A which has offered a one-month loan at an APR of 11.7%. The bank will require a (no interest) compensating balance of 5.5% of the face value of the loan and will charge a $90 loan origination fee Because H2M has no cash it will need to borrow the funds to cover these additional amounts as well Alternative C: Borrow the money needed to pay its supplier today from Bank B. which has offered a one-month loan at an APR of 15 1%. The loan has a 0 6% loan origination fee which again H2M will need to Which alternative is the cheapest source of financing for Hand-to-Mouth? borrow to cover Alternative A: The effective annual cost is 1% (Round to two decimal places)