Loh Excavating Inc. is purchasing a bulldozer. The equipment has a price of $300,000. The manufacturer has
Question:
Loh Excavating Inc. is purchasing a bulldozer. The equipment has a price of $300,000. The manufacturer has offered a payment plan that would allow Loh to make 10 equal annual payments of $48,823.59, with the first payment due one year after the purchase.
Instructions
(a) How much total interest will Loh pay on this payment plan?
(b) Loh could borrow $300,000 from its bank to finance the purchase at an annual rate of 9%. Should Loh borrow from the bank or use the manufacturer’s payment plan to pay for the equipment?
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a Total payments Amount owed today Total interest 48823590 10 ...View the full answer
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Related Book For
Intermediate Accounting
ISBN: 978-1118147290
15th edition
Authors: Donald E. Kieso, Jerry J. Weygandt, and Terry D. Warfield
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