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Company A wishes to borrow $100,000 for 1 year. It must choose one of the following...

Company A wishes to borrow $100,000 for 1 year. It must choose one of the following alternatives:

Alternative 1: 6percent loan on add-on basis, with equally quarterly payments required on initial face value.

Alternative 2: Revolving Credit agreement with a bank amounting to $500,000 with 5% interest and 1.5% commitment fee on unused portion.

What is the annual interest percentage cost of alternative 1 and 2?

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