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Boatler Used Cadillac Co. requires $910,000 in financing over the next three years. The firm can borrow the funds for three years at 8 percent
Boatler Used Cadillac Co. requires $910,000 in financing over the next three years. The firm can borrow the funds for three years at 8 percent interest per year. Me Boatier decides to do forecasting and predicts that if he utilizes short-term financing instead, he will pay 4 percent interest in the first year, 7 percent in the second year, and 12 percent interest in the third year. a. Determine the total three year interest cost under each plan. 25 Fixed cost financing Variable short-term financing Total Interest cost $ b. Which plan is less costly? O Fixed cost plan Short-term plan
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