Question

Carmen’s Beauty Salon has estimated monthly financing requirements for the next six months as follows: January $ 8,200 April $ 8,200 February 2,200 May 9,200 March 3,200 June 4,200 Short-term financing will be utilized for the next six months. Projected annual interest rates are: January 6.0 % April 13.0 % February 7.0 % May 12.0 % March 10.0 % June 12.0 % 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.)

Answer 1

Answer:

The  total dollar interest payments for the six months is $303.33

Explanation:

The computation of the total dollar amount for the six month is shown below:

= (January financing × annual interest rate) ÷ (total number of months in a year) + (February financing × annual interest rate) ÷ (total number of months in a year) + (March financing × annual interest rate) ÷ (total number of months in a year) + (April financing × annual interest rate) ÷ (total number of months in a year) + (May financing × annual interest rate) ÷ (total number of months in a year) + (June financing × annual interest rate) ÷ (total number of months in a year)

= ($8,200 × 6.0%) ÷ 12 months + ($2,200 × 7.0%) ÷ 12 months + ($3,200 × 10.0%) ÷ 12 months + ($8,200 × 13.0%) ÷ 12 months + ($9,200 × 12.0%) ÷ 12 months + ($4,200 × 12.0%) ÷ 12 months

= $41 + $12.83 + $26.67 + $88.83 + $92 + $42

= $303.33