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Estimated monthly financing requirements

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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: EM132346976

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