Which alternative is the cheapest source of financing

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Reference no: EM132006579

The Brittany R. & Zohra S. Company needs a one-year $10,000 loan. It is trying to decide which if the three alternatives to use:

Alternative A: A loan with an APR of 6% compounded monthly.

Alternative B: A loan with an APR of 8%, compounded annually, with a compensating balance requirement of 10% (on which no interest is paid).

Alternative C: A loan with an APR of 7%, compounding annually, with a 1% loan origination fee.

Which alternative is the cheapest source of financing for Brittany R. & Zohra S. Co.? (Show Calculations)

Reference no: EM132006579

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