Carmen’s Beauty Salon has estimated monthly financing requirements for the next six months as follows: January $ 8,100 April $ 8,100 February 2,100 May 9,100 March 3,100 June 4,100 Short-term financing will be utilized for the next six months. Projected annual interest rates are: January 5.0 % April 12.0 % February 6.0 % May 12.0 % March 9.0 % June 12.0 %
a. Compute total dollar interest payments for the six months. (Round your monthly interest rate to 2 decimal places when expressed as a percent. Round your interest payments to the nearest whole cent.)
b-1. Compute the total dollar interest payments if long-term financing at 12 percent had been utilized throughout the six months? (Round your monthly interest rate to 2 decimal places when expressed as a percent. Round your interest payments to the nearest whole cent.)
b-2. If long-term financing at 12 percent had been utilized throughout the six months, would the total-dollar interest payments be larger or smaller than with the short-term financing plan? Larger Smaller eBook & Resources eBook: The Financing Decision ©2017 McGraw-Hill Education. All rights reserved.