Save Homework: Chapter_20 Score: 0 of 1 pt P 20-8 (similar to) 8 of 20 (0 complete) HW Score: 0%, 0 of 20 pts Question Help Hand to Mouth (H2M) is currently cash-constrained, and must make a decision about whether to delay paying one of its suppliers, or take out a loan They owe the supplier $12,000 with forms of 2 2/10 Net 40, so the supplier will give them a 2 2% discount if they pay by today (when the discount period expires) Alternatively, they can pay the full $12,000 in one month when the invoice is due H2M is considering three options Alternative A: Forgo the discount on its trade credit agreement wait and pay the full $12,000 in one month Alternative B: Borrow the money needed to pay its supplier today from Bank A, which has offered a one month loan at an APR of 12.1%. The bank wil requre a (no interest) componsaling balance of 5,5% of the face value of the loan and will charge a $110 loan origination fee Because H2M has no cash, it will need to borrow the funds to cover these additional amounts as well Alternative C: Borrow the money needed to pay its supplier today from Bank B, which has offered a one-month loan at an APR of 14.9%. The loan has a 1.4% loan origination fee, which again H2M will need to borrow to cover Which alterative is the cheapest source of financing for Hand-to-Mouth? Alternative A: The effective annual cost is % (Round to two decimal places) P 20-9 (similar to) Question Help Your firm has a committed line of credit with your bank with a commitment of 07 (EAR) and an interest rate of 58% (LAR) The total SCOO 000 and you borrowed $300,000 at the beginning of the year If you repay the $300,000 at the end of the year, what is your total cost in dollars of the interest and commitment to? What is this costas a percentage of the amount you borrowed? Your total cost in dollars of the interest and commitment fees (Round to the nearest dollar)