Whatchamacallit Sports (B). Whatchamacallit Sports (Whatchamacallit) is considering bidding to sell $115,000 of ski equipment to Phang Family Enterprises of Seoul, Korea. Payment would be due in seven months. Since Whatchamacallit cannot find good credit information on Phang, Whatchamacallit wants to protect its credit risk. It is considering the following financing solutions. Alternative 1: Phang's bank issues a letter of credit on behalf of Phang and agrees to accept Whatchamacallit's draft for $115,000 due in seven months. The acceptance fee would cost Whatchamacallit $525, plus reduce Phang's available credit line by $115,000. The bankers' acceptance note of $115,000 would be sold at a 1.9% per annum discount in the money market. Alternative 2: Whatchamacallit could also buy export credit insurance from FCIA for a 1.5% premium. It finances the $115,000 receivable from Phang from its credit line at 5.8% per annum interest. No compensating bank balance would be required. a. What is Whatchamacallit's annualized percentage all-in cost of each alternative? b. What are Phang's costs for alternative 2? c. What are the advantages and disadvantages of alternative 2 compared to the bankers' acceptance financing in alternative 1? Which alternative would you recommend? (NOTE: Assume a 360-day year.)