Answer key is below from the back of the book. I would like to know how these answers are calculated. Thank you.

4. There are three alternatives to increase a net working capital of $10,000. Calculate the effective annual cost of each alternative. a. Forego cash discounts with the terms of 2/10, net 40. b. Borrow the money at 7 percent from the bank. This bank loan requires a minimum compensating balance of 20 percent and interest on the loan is paid at maturity. c. Sell commercial paper at 8 percent. The underwriting fees of the issue are 2 percent of the face value. d. Which alternative should be chosen and why? 4a. 24.5%. 4b. 8.8%. 4c. 8.9%. 4d. The bank loan