interest rate and bank business loans

Q2. Interest Rates on Bank Business Loans (12%) but post merger HH I 1600 Suppose that Macao Development Bank offers Chen & Chen Trading Company a short-term loan of $1,000,000 to finance its operation. The bank has its prime rate of 4.625% and/or raises by selling NCD at interest rate of 2.875% to fund this loan. The additional costs are as follows: Non-funds operating costs are estimated at 0.75% and additional 1.25% is to compensate for default risk. The lender requires 1.00% as profit margin. (1) Calculate interest rates on loans under 1.25 times-prime rate of price leadership method. (3%). 4.625%x1.25 - 578125% (2) Calculate interest rates on loans under the cost-plus loan pricing method. (3%). 3) Calculate interest rates on loans under prime rate plus 2 of price leadership method (3%). 4.6257 +22 6.625% 4) Which is the best alternative for Chen & Chen Trading Company? Why? (3%)