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Rockford Filing Ltd. requires $1 million in financing for a 45 -day period. Three alternatives are being considered. (Use 365 days in a year. Do
Rockford Filing Ltd. requires $1 million in financing for a 45 -day period. Three alternatives are being considered. (Use 365 days in a year. Do not round intermediate calculations. Round the final answers to 2 decimal places.) a. Establish a line of credit with the bank at an interest rate of 10 percent. The bank will charge a fee of 1% to establish the line of credit. b. Forgo trade discounts from suppliers on terms of 2/15, net 60 . c. Issue commercial paper for 45 days at a discount of 1.25 percent. a. What is the actual percentage cost of the line of credit? Rate of Interest for bank loan b. What would be the cost of forgoing the cash discount? Cost of forgoing the cash discount c. What would be the Price and cost of commercial paper? Price Discounted commercial paper d. Which alternative should be selected? Bank loan Cost of forgoing discount Commerical paper
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