Which of the following offer the lowest effective rate for

Question

Which of the following offer the lowest effective rate for Wolf Howl jackets? Assume Wolf Howl will need to borrow $800,000 for 180 days.

1. A 14 percent APR bank loan
2. A 13 percent APR, discounted bank loan.
3. 12.5 percent APR with fees of 1 percent for receivables financing.
4. A $2 million revolving credit agreement with an APR of 12 percent, a commitment fee of 0.5 percent on the unused balance, and a 10 percent compensating balance requirement.