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Unsecured sources of short-term loans Personal Finance Problem John Savage has obtained a short-term loan from First Carolina Bank. The loan matures in 180 days

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Unsecured sources of short-term loans Personal Finance Problem John Savage has obtained a short-term loan from First Carolina Bank. The loan matures in 180 days and is in the amount of $43,000. Joly needs the money to cover start-up costs in a new business. He hopes to have sufficient backing from other inwestors by the end of the next 6 months. First Carolina Bank offers John two financing options for the $43,000 loan a fixed-rate loan at 2.1% above the prime rate, or a variable-rate loan at 1,0% above prime Currently, the prime rate of interest is 6.6%, and the consensus interest rate forecast of a group of economists is as follows: 60 days from today the prime rate will rise by 0.2%; 90 days from today the prime rate will rise another 1.1%: 180 days from today the prime rate will drop by 0.4%. Using the forecast prime rate changes, answer the following questions. Assume a 365-day year a. Calculate the total interest cost over 100 days for a fixed-rate loan b. Calculate the total interest cost over 180 days for a variable-rate loan. c. Which is the lower-interest.cost loan for the next 180 days? a. If the fixed-rate loan costs 2.1% above the prime rate, the Interest cost for the fixed-rate loan over 180 days is $. (Round to the nearest cont.) b. If the variable-rate loan costs 1.8% above the prime rate for the first 60 days, the interest cost for the variable-rate loan is $). (Round to the nearest cent) 160 days from today the prime rate will rise by 0.2% to 6.8%, for the next 30 days, the Interest cost for the variable-rate loan is $ (Round to the nearest cont.) If 90 days from today the prime rate will rise another 1.1% to 7,9%, for the final 90 days, the interest cost for the variable-rate loan is $. (Round to the nearest cent) The total interest paid over 180 days for the variable-rate loan is $. (Round to the nearest cent.) c. Which is the lower interest-cost loan for the next 180 days? The lower interest-cost loan is the loan. (Select from the drop-down menu.) Enter your answer in each of the answer boxes

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