GreenGround Sdn Bhd needs to increase its working capital by RM3,000,000. The company has three financing alternatives:

Alternative 1:

Forego cash discounts on terms 4/15 net 50 and pay on the final due date.

Alternative 2:

Borrow from SMM Bank at 15% discount interest. The company must maintain 25% compensating balance.

Alternative 3:

A line of credit of RM3,200,000 from DFF Bank at an interest rate of 12% and a commitment fee of 5% of the unused balance.

Required:

Determine the best financing alternative that the company should select.