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

January	$	8,400	April	$	8,400
February		2,400	May		9,400
March		3,400	June		4,400

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

January	8.0	%	April	15.0	%
February	9.0	%	May	12.0	%
March	12.0	%	June	12.0	%

a.	Compute total dollar interest payments for 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-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?
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References WorksheetDifficulty: ChallengeProblem 6-18 Interest costs under alternative plans [LO3]Learning Objective: 06