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1 August, 04:52

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 payments at the end of each of the next six years. How much interest will Charlie Corp. pay over the term of the loan?

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  1. 1 August, 05:09
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    The interest charged = $113,400

    Explanation:

    Data provided:

    Cash cost of purchasing equipment = $300,000

    Accepted offer

    Part payments = $68,900

    Duration = 6 years

    Now,

    The total payment made = Part payment each year * total years

    or

    The total payment made = $68,900 * 6 = $413,400

    Also,

    Total payment = Principle amount + Interest charged

    Therefore,

    $413,400 = $300,000 + Interest charged

    or

    Interest charged = $413,400 - $300,000

    or

    The interest charged = $113,400
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