Boatler Used Cadillac Co. requires $880,000 in financing over the next two years. The company can borrow the funds for two years at 10 percent annual interest. Mr. Boatler decides to make forecasts and predicts that if he uses short-term financing instead, he will pay interest of 6.75 percent in the first year and 6.75 percent in the second year. (a) Determine the total interest cost for two years under each plan. (Omit the "$" sign in your answer.) Interest cost Fixed-cost financing $ Short-term variable financing $ (b) Which plan is less expensive? Short term plan Fixed cost plan

Answer rating: 100% (QA)

a To determine the total interest cost for two years under each plan we can use the following formul... View the full answer