ACCOUNTING-Carmen’s Beauty Salon has estimated monthly financing requirements

QUESTION

Carmen’s Beauty Salon has estimated monthly financing requirements for the next six months as follows: January$8,400 April$8,400 February2,400 May9,400 March3,400 June4,400 Short-term financing will be utilized for the next six months. Projected annual interest rates are: January8.0 % April15.0 % February9.0 % May12.0 % March12.0 % June12.0 %a.Compute total dollar interest payments for the six months. (Round your monthly interest rate to 2 decimal places when expressed as a percent. Round your interest payments to the nearest whole cent.) Total dollar interest payments$ 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?SmallerLargerReferences WorksheetDifficulty: ChallengeProblem 6-18 Interest costs under alternative plans [LO3]Learning Objective: 06

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