3) Yo Berhad needs to increase its working capital by RM 8 million. The following Three (3) financing alternatives are available:

i) Forego cash discounts on terms 3/10 net 40 and pay on the final due date.

ii) Borrow RM 8 million from a bank at 13% interest. The company must maintain a 10% compensating balance.

iii) Issue RM 8 million worth of commercial paper. Interest charged is 7% and a fee of 3% is payable to the dealer.

Which alternative should Yo Berhad selects?