Charlie Corp. is purchasing new equipment with a cash cost of $300,000 for an assembly line. The manufacturer has offered to accept $68,900 payment at the end of each of the next six years. How much interest will Charlie Corp. pay over the term of the loan

The answer is D) 113 400

Explanation:

Interest are the amounts that exceed the capital repayment (the original $ 300 000 represents the capital repayment). By multiplying the annual payment by the number of years (6 x 68900) and subtracting the original capital amount of $300 000 we're left with $ 113 400. This represents the amount of interest expense over the period

D. $113,400

Explanation:

Given that

Cash cost = 300,000

Installmental payments = $68900 each year for 6 years.

Therefore

Interest = total installment payment - cash cost

= (68900 * 6) - 300,000

= 413,400 - 300,000

= $113,400.