Answer (C) is correct . The total cost to the company will be $51,500 ($50,000 discount + $1,500 of transaction costs), and the net amount available will be $1,448,500. The annualized amount of the costs is $206,000 ($51,500 ¡Á 4). Accordingly, the annual interest cost will be 14.22% ($206,000 ¡Â $1,448,500).Answer (A) is incorrect because This percentage ignores the transaction costs and fails to annualize the percentage.
Answer (B) is incorrect because This percentage fails to annualize the result.
Answer (D) is incorrect because This percentage ignores the transaction costs.
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