Atlas Corporations is expected to be low on liquidity by $1.5 million for the coming 2 months. The company's directors are evaluating the following options:

Option 1: Commercial paper at 7% with a dealer's commission of 1/5% and a backup line at cost of 1/2%.

Option 2: Drawing on a line of credit at 7% with a 0.3% commitment fee on the full amount: one-twelfth of the commitment fee is allocated to each month.

Option 3: Banker's acceptance at 8% which is an all-inclusive rate.

Which of the above options is the least costly to Atlas Corporations? Why?

Answer rating: 100% (QA)

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