The treasurer of the Tin Mfg. Company is faced with three alternative bank loans. The firm wishes to select the one that minimizes the cost of credit on a P200,000 note that it plans to issue in the next 10 days. Relevant information for the here loan configuration is found below:

1. An 18% rate of interest with interest paid at year-end and no compensating balance requirement.
2. A 16% rate of interest but carrying a 20% compensating balance requirement. This loan also calls for interest to be paid at year-end.
3. A 14% rate of interest that is discounted plus a 20% compensating balance requirement.

Analyze the cost of each of these alternatives. You may assume that the firm would not normally maintain any bank balance that might be used to meet the compensating balance requirement of alternatives (b) and (c). Support your recommendation with supporting computations.