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Boatler Used Cadillac Co. requires $890,000 in financing over the next two years. The firm can...

Boatler Used Cadillac Co. requires $890,000 in financing over the next two years. The firm can borrow the funds for two years at 11 percent interest per year. Ms. Boatler decides to do forecasting and predicts that if she utilizes short-term financing instead, she will pay 7.25 percent interest in the first year and 12.55 percent interest in the second year. Assume interest is paid in full at the end of each year.

a. Determine the total two-year interest cost under each plan.

b. Which plan is less costly?

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Answer #1

SEE THE IMAGE. ANY DOUBTS, FEEL FREE TO ASK. THUMBS UP PLEASEH w x . J= ENG 06-35 17-05-2020 B 27 X AH66 fx AB AC AD AE AF AG AH AI AJ AK AL AM LONG TERM FIXED RATE = 11% 44 45 46 47 48

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