MiraWest Enterprises has sold a combination of films and DVDs to Hong Kong Media Incorporated for US$ $107,000,$ with payment due in six months. MiraWest has the following alternatives for financing this$$ receivable: $(1)$ use its bank credit line. Interest would be at the prime rate of $5\mathrm{.}1\%$ plus $150$ basis points per$$ annum; or$(2)$ Use its bank credit line but purchase export credit insurance for a $1\%$ fee. Because of the reduced$$ risk, the bank interest rate would be reduced to $5\mathrm{.}1\%$ per annum without any points. In both cases MiraWest would need to maintain a compensating balance of $20\%$ of the$$ loan's face$$ amount, and no interest will be paid on the compensating balance by the bank.$3)$ MiraWest Enterprises has been approached by a factor that offers to purchase the Hong Kong Media Imports receivable at a $15\mathrm{.}5\%$ per annum discount plus a $1\mathrm{.}8\%$ charge for a$$ non$-$recourse clause.

a$.$ What are the annualized percentage$$ all$-$in costs of each$$ alternative?

b$.$ What are the advantages and disadvantages of the factoring alternative compared to the alternatives $1$ and$2?$

$($NOTE: Assume a$360-$day year.$)$