Procter Micro-Computers, Inc., requires $1,200,000 in financing over the next?

Procter Micro-Computers, Inc., requires $1,200,000 in financing over the next two years. The firm can borrow the funds for two years at 9.5 percent interest per year. Mr. Procter decides to do economic forecasting and determines that if

he utilizes short-term financing instead, he will pay 6.55 percent interest in the first year and 10.95 percent interest in the second year. Determine the total two-year interest cost under each plan. Which plan is less costly?

Procter Micro-Computers, Inc., requires $1,200,000 in financing over the next?free anti virus

12 * 0.095 +(12 * 0.095 +12) * 0.095=

1.14 + 1.2483

here I am assuming he needs to pay interest on the interest accumulated from your one. Even if that is not needed the sum is more than the short term

1.14 + 1.14 = 2.28 no compound interest

12 * 0.0655 + 12 * 0.1095 =

0.786 + 1.314 = 2.1 total interest with short term loans

you do not need to really know what the amount is because as long as it is a constant, the percentages will be correct to solve the problem