Carmen’s Beauty Salon has estimated monthly financing requirements for the next six months as follows: January $ 8,600 April $ 8,600 February 2,600 May 9,600 March 3,600 June 4,600 Short-term financing will be utilized for the next six months. Projected annual interest rates are: January 5 % April 12 % February 6 May 12 March 9 June 12 What long-term interest rate would represent a break-even point between using short-term financing and long-term financing? (Round your monthly interest rate to 2 decimal places when expressed as a percent. Round your interest payments to the nearest whole cent. Input your answer as a percent rounded to 2 decimal places.)

9.70% annual or 0.808% per month

Explanation:

month    financing requirements       interest rate       interest charged

January            8,600                             5%                        35.83

February          2,600                             6%                          13

March              3,600                             9%                          27

April                 8,600                             12%                        86

May                  9,600                            12%                         96

June                4,600                             12%                         46

total                37,600                                                        303.83

break even annual rate = 12 months x (total interest charged / total financial requirements) = 12 x (303.83 / 37,600) = 0.096967 = 9.70% or 0.808% per month

we can check our

month    financing requirements       interest rate       interest charged

January            8,600                             9.7%                        69.49

February          2,600                             9.7%                         21.01

March              3,600                              9.7%                       29.09

April                 8,600                             9.7%                        69.49

May                  9,600                             9.7%                        77.57

June                4,600                              9.7%                        37.17

total                37,600                                                          303.82

answer; signaling;

answerattainable;