Required: Solutions and explanation. (Provide the preferred bank's simple annual cost of loan)

Note: (1) Do not round off anytime during the computation but round off amounts in the solutions to two decimal places.

Final answers, both in pesos and in percents must be written and typed to two decimal places, e.g. 66.67 for P66.6666

2. DEF Corporation will be needing P1,000,000 additional cash inflow. It is looking to finance this through either Bank One or Bank Zero for a period of 6 months. Bank One offers a 10% loan but requires a P20,000 bank charge. On the other hand, Bank Zero is willing to offer an 8% loan but requires P100,000 compensating balance. Which bank should DEF approach? In the space below, provide the preferred bank's simple annual cost of loan. (format: 6.67 for 6.6666%) *