DO THE NEXT 2 PARTS

EFFECTIVE ANNUAL COST FOR ALTERNATIVE B AND C

Hand-10-Mouth (H2M) is currenty cash-constrained, and must make a decisian about whether to delay paying one of its suppliers, or tako out a loan. They owe the suppler 512.000 weh terris of 2.210Net40, so the supplier will give them a 2.2% discount if they pay by todoy (when the discount period expires). Atematively, they can pay the full 512,000 in one month when the invoice is due. H2M is considering three options: Alternative A: Forgo the discount on iss trade credi agreement, wat and pay the full $12,000 in one month Alternative B: Borrow the money needed to pay its sugplier lodary from Bark A, which has oflered a one-month loan at an APR of 11.6%. The bank will require a (no-interest) compensating balanch of 5.3% of the foco value of the loan and wil charge a $110 loan origination fee. Because HzM has no cash, it wil need to bortow the funds to cover these additional amounts as well. Alternative C: Borrow the money needed to pay is suppler today from Bank B, which has offered a one-month laan at an APR of 15%. The loan has a 1.1% loan origination fee, which again H2M will need to botrow to cover Which altemative is the cheapest source of trancing for Hand-to-Mouth? Alemative A: The eflective annual cost is (Round to two decimal places.) Auternative B: The effective annual rate is 6. (Round to two decimal places.)