Question

Blossom Excavating Inc. is purchasing a bulldozer. The equipment has a price of $107,400. The manufacturer has offered a payment plan that would allow Blossom to make 10 equal annual payments of $17,500.00, with the first payment due one year after the purchase. How much total interest will Blossom pay on this payment plan?

Answer 1

$67,600

Step-by-step explanation:

First, find the interest rate on the loan.

Pv = $107,400

Pmt = - $17,500

n = 10

P/Yr = 1

Fv = $0

i = ?

Using a Financial Calculator to input the values as show, the interest rate (i) will be 10.0282 or 10 %

Use the Amort Function to start populating an amortization schedule.

To find the total Interest [Financial Calculator]:

Enter 1 INPUT 10 + SHIFT + AMORT

We get = $67,600 as the total Interest.