Question

Question 2 of 4 Tan Company purchased a large server for $37,500. The company paid 50.00% of the value as a down-payment and received a loan for the balance at 4.25% compounded monthly. The loan has a term of 6 years and Tan Company has to make month-end payments to settle the loan. a. What is the size of the month-end payments? $0.00 Round to the nearest cent b. What was the total amount paid to settle the loan? $0.00 Round to the nearest cent C. Calculate the total amount of interest paid throughout the term of the loan. Round to the nearest cent Next Question MacBook Air

Answer 1

a). Loan Amount = Purchase Price * (1 - Down payment %)

= $37,500 * (1 - 0.50) = $18,750

Monthly Payment = [Loan Amount * r] / [1 - (1 + r)^-n]

= [$18,750 * (0.0425/12)] / [1 - {1 + (0.0425/12)}^-(6*12)]

= $66.41 / 0.2247 = $295.49

b). Total Amount Paid = Monthly Payment * Total no. of payments

= $295.49 * (6*12) = $21,275.12

c). Total Interest Paid = Total Amount Paid - Loan Amount = $21,275.12 - $18,750 = $2,525.12