(Cost of short-term financing) The R. Mocin Construction Company needs to botrow $80,000 to help finance the cost of a new $112,000 hydraulic cranet used in the femrs commerdal construction business, The crane will pay for itsey in 1 year, and the firm is considering the following atematives for financing its purchase: Altermative A-The frm's bapk has agreed to lend the $80,000 at a rate of 14 percent, interest would be discounted, and a 16 perctent compensuting bavanco would be required, Howeret, the compensating-balance requiroment would not be binding on R. Morin because the firm normally maintains a minimum demand deposit (checking account) basance of 520.000 in the bank. Alternative B - The equipment dealer has apreed to finance the equipment with a 1-yoar loan. The $80,000 loan would require poyment of principal and interest totaing 392.608. a. Which alternative should R. Morin select? b. If the bank's compensating-balance requirement were to necessitate idle demand deposits equal to 16 peccent of the loan, what eflect would this have on the coet of the bank ioan aitimative? a. Which alternative should R. Morin select? The cost of alternative A would be \%. (Round to two decinal places)