Problemboatler used cadillac co requires 850000 in, Ask an Expert

Finance

Problem:

Boatler Used Cadillac Co. requires $850,000 in financing over the next tow years. The firm can borrow the funds for two years at 12 percent interest per year. Mr. Boatler decides to do forecasting and predicts that if he utilizes short term financing instead, he will pay 7.75 percent of interest in the first year and 13.55 percent of interest in the second year.

Required:

Question: Determine the total two-year interest cost under each plan. Which plan is less costly?

Note: Explain all calculation and formulas.

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Basic Finance, Finance

Category:- Basic Finance
Reference No.:- M91149081

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