Question

John Fare purchased $24,000 worth of equipment by making a $4000 down payment and promising to...

John Fare purchased $24,000 worth of equipment by making a $4000 down payment and promising to pay the remainder of the cost in semiannual payments over the next 5 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 $

Homework Answers

Answer #1
Loan amount = 24000 - 4000 = 20000
n = Number of semi annual payment = 5 * 2 = 10
r = Semi-annual rate = 10%/2 = 5%
(a)
Size of each payment = Loan amount / ( (1-(1+r)^-n)/r ) = 20000 / ( (1-(1+5%)^-10)/5% ) = 2590.09
(b)
Total amount paid over the life of the loan = Size of each payment * n = 2590.09 * 10 = 25900.90
(c)
Total interest paid over the life of the loan = Total amount paid over the life of the loan - Loan amount = 25900.90 - 20000 = 5900.90
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
John Fare purchased $24,000 worth of equipment by making a $4000 down payment and promising to...
John Fare purchased $24,000 worth of equipment by making a $4000 down payment and promising to pay the remainder of the cost in semiannual payments over the next 5 years. The interest rate on the debt is 10%, compounded semiannually. Find the following. (Round your answers to the nearest cent.) b) the total amount paid over the life of the loan $
John Fare purchased $6,000 worth of equipment by making a $1000 down payment and promising to...
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...
A man buys a house for $350,000. He makes a $150,000 down payment and amortizes the...
A man buys a house for $350,000. He makes a $150,000 down payment and amortizes the rest of the purchase price with semiannual payments over the next 13 years. The interest rate on the debt is 9%, compounded semiannually. (a) Find the size of each payment.  the answer is not 13204.483 (b) Find the total amount paid for the purchase. the answer is not 493304 (c) Find the total interest paid over the life of the loan. the answer is not...
ABC. Corp. purchased new equipment by making a down payment of $1,500 and payments of $265...
ABC. Corp. purchased new equipment by making a down payment of $1,500 and payments of $265 at the end of each month for four years. Interest is 9.0% compounded quarterly. a. What was the purchase price of the new equipment? ___________ b. How much interest will be paid?
The problem describes a debt to be amortized. (Round your answers to the nearest cent.) A...
The problem describes a debt to be amortized. (Round your answers to the nearest cent.) A man buys a house for $340,000. He makes a $150,000 down payment and amortizes the rest of the purchase price with semiannual payments over the next 5 years. The interest rate on the debt is 10%, compounded semiannually. (a) Find the size of each payment. $ (b) Find the total amount paid for the purchase. $ (c) Find the total interest paid over the...
The problem describes a debt to be amortized. (Round your answers to the nearest cent.) A...
The problem describes a debt to be amortized. (Round your answers to the nearest cent.) A man buys a house for $350,000. He makes a $150,000 down payment and amortizes the rest of the purchase price with semiannual payments over the next 13 years. The interest rate on the debt is 9%, compounded semiannually. (a) Find the size of each payment. $   (b) Find the total amount paid for the purchase. $   (c) Find the total interest paid over the...
The problem describes a debt to be amortized. (Round your answers to the nearest cent.) A...
The problem describes a debt to be amortized. (Round your answers to the nearest cent.) A man buys a house for $390,000. He makes a $150,000 down payment and amortizes the rest of the purchase price with semiannual payments over the next 9 years. The interest rate on the debt is 13%, compounded semiannually. (a) Find the size of each payment. $ (b) Find the total amount paid for the purchase. $ (c) Find the total interest paid over the...
The problem describes a debt to be amortized. (Round your answers to the nearest cent.) A...
The problem describes a debt to be amortized. (Round your answers to the nearest cent.) A man buys a house for $300,000. He makes a $150,000 down payment and amortizes the rest of the purchase price with semiannual payments over the next 8 years. The interest rate on the debt is 13%, compounded semiannually. (a) Find the size of each payment. (b) Find the total amount paid for the purchase. $ (c) Find the total interest paid over the life...
The problem describes a debt to be amortized. (Round your answers to the nearest cent.) A...
The problem describes a debt to be amortized. (Round your answers to the nearest cent.) A man buys a house for $390,000. He makes a $150,000 down payment and amortizes the rest of the purchase price with semiannual payments over the next 9 years. The interest rate on the debt is 13%, compounded semiannually. (a) Find the size of each payment. $    (b) Find the total amount paid for the purchase. $    (c) Find the total interest paid...
The problem describes a debt to be amortized. (Round your answers to the nearest cent.) A...
The problem describes a debt to be amortized. (Round your answers to the nearest cent.) A man buys a house for $360,000. He makes a $150,000 down payment and amortizes the rest of the purchase price with semiannual payments over the next 6 years. The interest rate on the debt is 9%, compounded semiannually. (a) Find the size of each payment. $   (b) Find the total amount paid for the purchase. $   (c) Find the total interest paid over the...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT