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.

Ch. 3, 5-6 Math Homework Question 4 (af 4) 4. 1000 points Boatler Used Cadillac Co. requires $890,000 in firancing over the next two years. The firm can borrow the funds for two years at 11 percent interest per year. Mr. Boatier decides to do forecasting and predicts that ir he ubilizes short-erm rancing instead, he wll pa 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 lot al two-year interest cost under each plan. Interest Cost Short term variable-rate b. Which plan is less costly? Long term fixed-rate plan Short-term variable-rate plan Hints References Bok & Resources Hint#1 O Type here to search