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 cost of commercial paper? Discounted commercial paper %

d. Which alternative should be selected? multiple choice Bank loan Cost of forgoing discount Commerical paper