Procter Micro-Computers, Inc. requires $1,200,00 in financing over the next two years
Procter Micro-Computers, Inc. requires $1,200,00in 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 frecasting 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?
