Instruction to Chegg Solver : Must be solved with Documents( Word pad, Notepad...) or convertible to Ms. word or excel, other wise hand written will not be preferred.

3:

Breshna Company wishes to borrow $250,000 for one year. It has the following alternatives available to it. a) A 10 percent loan on a discount basis with 15 percent compensating balances required. b) An 8.5 percent loan on a discount basis with 20 percent compensating balances required. c) A 9.5 percent loan on a discount basis with 10% compensating balance required. d) A 12.5 percent loan on collect basis with no compensating balance requirement. Which alternative should the Breshna Company choose if it is concerned with the effective interest rate?