Liz's Health Food Store has estimated monthly financing requirements for the next six months as follows: January February March $9,500 April 3,500 4,500 January February March May June Short-term financing will be utilized for the next six months. Projected annual interest rates are: 9.0% April 10.0% May 13.0% June $9,500 10,500 5,500 15.0% 12.0% 12.0% 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 $ 427.92 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 $

Liz's Health Food Store has estimated monthly financing requirements for the next six months as follows: January February March $9,500 April 3,500 4,500 January February March May June Short-term financing will be utilized for the next six months. Projected annual interest rates are: 9.0% April 10.0% May 13.0% June $9,500 10,500 5,500 15.0% 12.0% 12.0% 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 $ 427.92 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 $

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter16: Working Capital Policy And Short-term Financing

Section: Chapter Questions

Problem 14P

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Ashvin
Liz's Health Food Store has estimated monthly financing requirements for the next six months as follows: January February March $9,500 April 3,500 4,500 May June Short-term financing will be utilized for the next six months. Projected annual interest rates are: January 9.0% April February 10.0% May March 13.0% June $9,500 10,500 5,500 15.0% 12.0% 12.0% 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 427.92
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