15-5. (Cost of short-term financing) Bouygues Construction S.A., headquartered in Paris, France, needs to borrow 178,000 to help finance the cost of a new 200,000 hydraulic crane used in the firm's commercial construction business. The crane will pay for itself in 1 year, and the firm is considering the following alternatives for financing its purchase: Alternative AThe firm's bank agrees to lend the 178,000 at a rate of 12 percent. Interest would be discounted, and a 13 percent compensating balance would be required. However, the compensating-balance requirement would not be binding on Bouygues Construction because the firm normally main- tains a minimum demand deposit (checking account) balance of 28,000 in the bank Alternative B --The equipment dealer agrees to finance the equipment with a 1-year loan. The 178,000 loan would require payment of principal and interest totaling 185,500. a. Which alternative should Bouygues Construction select? b. If the bank's compensating-balance requirement were to necessitate idle de- mand deposits equal to 13 percent of the loan, what effect would this have on the cost of the bank loan alternative