Determine the total interest charges under each plan

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Question - ABC Corp. requires $500,000 in financing over the new three years. The firm can borrow the funds for three years at 10.60 percent per year. The CEO decides to do forecast and predicts that if the firm utilizes short-term financing instead it will pay 7.25 percent in the first year, 11.50 percent in the second year and 8.15 in the third year. Determine the total interest charges under each plan. Which action is less costly? Show your calculations.

Reference no: EM132790480

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