William Jones is evaluating three possible means of borrowing $1 million for one month: 

1. Drawing down on a line of credit at 7.2% with a 1/2 percent commitment fee on the full amount with no compensating balances. 

2. A banker’s acceptance at 7.1%, an all-inclusive rate. 

3. Commercial paper at 6.9% with a dealer’s commission of 1/4% and a backup line cost of 1/3%, both of these would be assessed on the $1 million of commercial paper issued.

Which of these forms of borrowing results in the lowest cost of credit?

A. Line of credit.

B. Banker’s acceptance.

C. Commercial paper.