Question

John Fare purchased $6,000 worth of equipment by making a $1000 down payment and promising to pay the remainder of the cost in semiannual payments over the next 3 years. The interest rate on the debt is 10%, compounded semiannually. Find the following. (Round your answers to the nearest cent.)

(a) the size of each payment

$   

(b) the total amount paid over the life of the loan

$   

(c) the total interest paid over the life of the loan

$

Answer 1

price of equipment $6000

the down payment is $1000

so loan amount is $6000-$1000=$5000

L=5000

r=10% = 0.1

n=2 for semiannual payement

t=3 years

PMT=?

......................size of each payment

.

.

the total amount paid over the life of the loan is given by

......................total amount paid

.

.

.

the total interest paid over the life of the loan is given by

.................... total interest paid