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Amos Excavating Inc. is purchasing a bulldozer. The equipment has a price of $104,000. The manufacturer has offered a payment plan that would allow Amos to make 12 equal annual payments of $14,524, with the first payment due one year after the purchase. (a) How much total interest will Amos pay on this payment plan? (Round answers to 0 decimal places, e.g. $458,581.) (b) Amos could borrow $104,000 from its bank to finance the purchase at an annual rate of 8%. Should Amos borrow from the bank or use the manufacturer's payment plan to pay for the equipment?

Amos Excavating Inc. is purchasing a bulldozer. The equipment has a price of $104,000. The manufacturer has offered a payment plan that would allow Amos to make 12 equal annual payments of $14,524, with the first payment due one year after the purchase. (a) How much total interest will Amos pay on this payment plan? (Round answers to 0 decimal places, e.g. $458,581.) (b) Amos could borrow $104,000 from its bank to finance the purchase at an annual rate of 8%. Should Amos borrow from the bank or use the manufacturer's payment plan to pay for the equipment?

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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Amos Excavating Inc. is purchasing a bulldozer. The equipment has a price of $104,000. The manufacturer has offered a payment plan that would allow Amos to make 12 equal annual payments of $14,524, with the first payment due one year after the purchase. (a) How much total interest will Amos pay on this payment plan? (Round answers to 0 decimal places, e.g. $458,581.) (b) Amos could borrow $104,000 from its bank to finance the purchase at an annual rate of 8%. Should Amos borrow from the bank or use the manufacturer's payment plan to pay for the equipment?
Transcribed Image Text:Amos Excavating Inc. is purchasing a bulldozer. The equipment has a price of $104,000. The manufacturer has offered a payment plan that would allow Amos to make 12 equal annual payments of $14,524, with the first payment due one year after the purchase. (a) How much total interest will Amos pay on this payment plan? (Round answers to 0 decimal places, e.g. $458,581.) (b) Amos could borrow $104,000 from its bank to finance the purchase at an annual rate of 8%. Should Amos borrow from the bank or use the manufacturer's payment plan to pay for the equipment?
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