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

January $ 10,000 April $ 10,000

February 4,000 May 11,000

March 5,000 June 6,000

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

January 9.0 % April 16.0 %

February 10.0 % May 12.0 %

March 13.0 % 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 payment _______

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 payment ________

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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