Liz's Health Food Store has estimated monthly financing requirements for the next six months as follows: January February March $8,700 April 2,700 May 3,700 June January February March Short-term financing will be utilized for the next six months. Projected annual interest rates are: 6.0% April 7.0% May 10.0% June $8,700 9,700 4,700 13.0% 12.0% 12.0%

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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Ashvin

Liz's Health Food Store has estimated monthly financing requirements for the next six months as follows:
January
February
March
$8,700 April
2,700
May
3,700
June
January
February
March
Short-term financing will be utilized for the next six months. Projected annual interest rates are:
6.0% April
7.0% May
10.0% June
13.0%
12.0%
12.0%
$8,700
9,700
4,700
a. Compute total dollar interest payments for the six months. To convert an annual rate to a monthly rate, divide by 12. (Round
intermediate calculations and final answers to 2 decimal places.)
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.
Assume a long-term rate is locked in on an interest-only loan.
Total dollar interest payments
$ 382
$
Transcribed Image Text:Liz's Health Food Store has estimated monthly financing requirements for the next six months as follows: January February March $8,700 April 2,700 May 3,700 June January February March Short-term financing will be utilized for the next six months. Projected annual interest rates are: 6.0% April 7.0% May 10.0% June 13.0% 12.0% 12.0% $8,700 9,700 4,700 a. Compute total dollar interest payments for the six months. To convert an annual rate to a monthly rate, divide by 12. (Round intermediate calculations and final answers to 2 decimal places.) 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. Assume a long-term rate is locked in on an interest-only loan. Total dollar interest payments $ 382 $
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