Question

To purchase $12,300 worth of restaurant equipment for his business, Ahmed made a down payment of $1800 and took out a loan for the rest. After 2 years of paying monthly of $465.38, he can finally pay off the loan.

(A) What was the total amount Ahmed ended up paying for the equipment( including the down payment and monthly payment)?
(B) how much interest did Ahmed pay on the loan?

Answer 1

Explanation:

A) After 2 years of paying monthly of $465.38, he can finally pay off the loan. There are 24 months in 2 years. This means that the total amount that Ahmed paid in 2 years would be

465.38 × 24 = $11169.12

Ahmed made a down payment of $1800 and took out a loan for the rest. Therefore, the total amount that Ahmed ended up paying for the equipment( including the down payment and monthly payment) is

1800 + 11169.12 = $12969.12

B) the initial amount that he took as loan is

12300 - 1800 = $10500

Therefore, the amount of interest that he paid on the loan would be

12969.12 - 10500 = $2469.12