Carmens Beauty Salon has estimated monthly financing requirements for the next six months as follows:

January	$	9,600	April	$	9,600
February		3,600	May		10,600
March		4,600	June		5,600

Short-term financing will be utilized for the next six months. Projected annual interest rates are:

January	5.0	%	April	12.0	%
February	6.0	%	May	12.0	%
March	9.0	%	June	12.0	%

a. Compute total dollar interest payments for the six months. (Round your monthly interest rate to

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? (Round your monthly interest rate to 2 decimal places when expressed as a percent. Round your interest payments to the nearest whole cent.)

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 than with the short-term financing plan?

multiple choice

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