You work for a subsidiary and your parent firm is offering a 5-year loan for $1.5 million at an APR of 4.95 percent with quarterly compounding. The local bank offers your firm a 5-year loan package of $1,000,000 with an effective yield of 4.98 percent and $500,000 with an effective yield of 5.10 percent. Which should your firm choose? What is the difference in the effective annual yield of the two bank alternatives?

• AParent: Parent deal has a 0.070% lower effective yield.
• BLocal bank: Local bank deal has a 0.145% lower effective yield.
• CLocal bank: Local bank deal has a 0.023% lower effective yield.
• DParent: Parent deal has a 0.090% lower effective yield.