Evo Berhad needs RM200,000 for 9 months additional short-term financing. The management has identified three (3) suitable financings for the project as follows:

Alternative 1

Issue commercial paper at 9% annual interest rate with floatation cost of RM3,000 per paper. The face value of each paper is RM50,000.

Alternative 2

A discounted loan at an interest rate of 7% and compensating balance of 5%.

Alternative 3

A revolving credit agreement amounting RM350,000. The commitment fee is 3%. The annual interest rate on the loan is 6%.

Alternative 4

Forego trade credit with the credit term of 2/10, net 50.

Which is the best alternative? Why?

 Johan has just invested RM8,760 for his son who just turned one. This money will be used for his son's education 18 years from now. He has calculated that he will need RM60,000 by the time the boy goes to the university. 

What is the rate of return in order to achieve this goal?