Question & Answer: Sosa Excavating Inc. is purchasing a bulldozer. The equipment has a price of $109,000. The manufacturer…..

Sosa Excavating Inc. is purchasing a bulldozer. The equipment has a price of $109,000. The manufacturer has offered a payment plan that would allow Sosa to make 15 equal annual payments of $14,331, with the first payment due one year after the purchase.

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(a)

How much total interest will Sosa pay on this payment plan? (Round factor values to 5 decimal places, e.g. 1.25124 and final answer to 0 decimal places, e.g. 458,581.)

Total interest

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Expert Answer

Solution

Total amount paid on 15 payments=$14,331×15

=$214,965

Total interest payment=$214,965 – $109,000

=$105,965

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