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Which option would select strictly based on effective cost

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Your company is considering three options for financing its short term operations

i. Borrow Tk.10 million from Shuktara Bank at 10 percent interest rate and a 15 percent compensating balance requirement signing a 60 day promissory note.

ii. Borrow Tk.10 million from Chandramukhi Bank at 10 percent discount interest.

iii. Forego discount on a trade credit on terms 2/10, net 60.

Problem 1: Strictly based on effective cost, which option would you select and why?

Reference no: EM132992224

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