QUESTION 3 a) Sports Mart, a chain of sporting goods stores, sells 360,000 baseballs per year. The baseballs purchase price per unit is RM1.25 each. Total carrying costs are 20 percent of purchase price. The ordering cost is RM72. Compute total inventory costs. (10 marks) b) Galore Incorporation requires RM500,000 to finance its operations. The following short- term resources of financing are available: Alternative I A loan from Sunburn Bank with a simple interest rate of 9 percent per annum for 3 months. A 20 percent compensating balance is required. Alternative II Issue commercial papers at a face value of RM5,000 per paper. The interest is 8 percent per annum for 270 days maturity period. The issuing cost is RM150 per paper. Alternative III A revolving line of credit of RM550,000 for a 1 percent commitment fee on the unused funds and an 8 percent interest rate. i) Calculate the effective interest rate for each alternative. ii) Justify the best alternative for Galore Incorporation. (9 marks) (1 mark)