Answered: What is the total amount of interest…

What is the total amount of interest expense Jimbo will pay over the life of the loan? Select one: a. 64,248 b. 34,792 c. 9,792 X d. 7,800 e. None of the above

Personal Finance

13th Edition

ISBN:9781337669214

Author:GARMAN

Publisher:GARMAN

Chapter7: Credit Cards And Consumer Loans

Section7.5: Calculating Interest On Consumer Loans

Problem 3CC

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Concept explainers

Cost of Credit

The cost of credit is an extra amount that the borrower has to pay besides the loan amount. These credit charges may vary from loan to loan. The cost of credit includes interest charges, maintenance charges, and arrangement charges. Some of the costs are mandatorily collected by the lender based on the loan amount and tenure of the loan. The cost of credit is also called finance charges of the credit.

Question

On January 1, 2018, Jimbo Enterprises purchased new equipment for its training center. The equipment cost $220,000. Jimbo paid $25,000 down and is required to pay the rest in semiannual installments for the next 8 years. Jimbo's cost of borrowing is 4%. What is the total amount of interest expense Jimbo will pay over the life of the loan?

What is the total amount of interest expense Jimbo will pay over the life of the loan?
Select one:
a. 64,248
b. 34,792
c. 9,792 X
d. 7,800
e. None of the above

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