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Boatler Used Cadillac Co. requires $890,000 in financing over the next two years. The firm can borrow the funds for two years at 11 percent interest per year. Mr. Boatler decides to do forecasting and predicts that if he utilizes short-term financing instead, he will pay 7.25 percent interest in the first year and 12.55 percent interest in the second year. Assume interest is paid in full at the end of each year.
a. Determine the total two-year interest cost under each plan.
Interest Cost
Long term ____________
Short Term ____________
b. Which plan is less costly?
Long-term fixed-rate plan
Short-term variable-rate plan
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Which of the given transactions would contribute to a U.S. current account surplus-
Prepare a make-or-buy analysis showing the annual advantage or disadvantage of accepting the outside supplier's offer.
Marc, age 45, sells his personal residence on May 15, 2015, for $180,000. He pays $8,000 in selling expenses and $900 in repair expenses to help sell the residence. He has lived in the residence since 1980, when he purchased it for $55,000. In 1996, ..
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