Solution-Compute total dollar interest payments

Compute total dollar interest payments

Reference no: EM132347787

Liz's Health Food Store has estimated monthly financing requirements for the next six months as follows:

January$8,400 April$8,400 February2,400 May9,400 March3,400 June4,400

Short-term financing will be utilized for the next six months. Projected annual interest rates are:

January8.0% April15.0% February9.0% May12.0% March12.0% June12.0%

a. Compute total dollar interest payments for the six months. To convert an annual rate to a monthly rate, divide by 12. (Round intermediate calculations and final answers to 2 decimal places.)

Total dollar interest payments $

b-1. Compute the total dollar interest payments if long-term financing at 12 percent had been utilized throughout the six months. Assume a long term rate is locked in on an interest-only loan.

Total dollar interest payments $

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?

Reference no: EM132347787

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Compute total dollar interest payments

Reference no: EM132347787

Reference no: EM132347787

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