QUESTION EO ecause of the seasonal natur Suncoast Boats Com business, it will require an additiona Coast Boats has the fo pany of Mombasa, estimates that b l Sh.20 Million of cash for the month of D T llowing 4 options available for raising needed funds: mmercial bank. The a c () Establish a 1-year line of credit for Sh.20 Million with ear on the unused portion, and the interest commitment fee will be 0.5% per y Assume that the funds are needed onl December, and that there are 30 days in December and 360 days in a year 2) Forego the trade discount of 2/10 net 40, on Sh.20 Milion of purchase in Decembe (3) Issue Sh 20 million of 30-day com mercial paper at 19.5% per annum interest on the used funds will be 21% per annum. The transaction fee, including the cost of a backup credit line on using com paper is 0.5% of the amount of the issue. rate commereia Issue Sh 20 million of 60-day commercial paper at a 19% per annum annual interest rate, paying a transaction fee of 0.5%. Since the funds are required for only 30 days the excess funds (Sh20 million) can be invested in 19.4% per annum marketable securities for the month of January. The total transactions cost of purchasing and selling the marketable securities is 0.4% of the amount of the issue. (4) Required: (a) What is the shilling cost of each financing arrangement? (16 Marks) Is the source with the lowest expected cost necessarily the one to select? Why or why not? (b) (4 Marks) 120 Marks]