Lamar Lumber buys $8 million of materials (net of discounts) onterms of 3/5, net 60, and it currently pays after 5 days and takesdiscounts. Lamar plans to expand, and this will require additionalfinancing. If Lamar decides to forego discounts, how muchadditional credit could it get, and what would the nominal andeffective cost of that credit be? If it could get the funds from abank at a rate of 10 percent, interest paid monthly, based on a365-days year, what would be the effective cost of the bank loan,and should Lamar use bank debt or additional trade credit? Explain?