Chapter 3: Q19BP (page 188)
In Problem 18, what long-term interest rate would represent a break-even point between using short-term financing as described in part a and long-term financing? (Hint: Divide the interest payments in 18a by the amount of total funds provided for the six months and multiply by 12.)
Short Answer
The monthly interest rate will be 1.014%, and 12.17% will be the annual interest rate.