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?
Chapter11: Capital Budgeting Decisions
Section: Chapter Questions
Problem 8MC: Grummet Company is acquiring a new wood lathe with a cash purchase price of $80,000. The Wood Master...
Related questions
Question
answer please
![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?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F217fddf7-ca0c-466f-a930-21665e536d8a%2Fc3681cd6-fd9e-425c-95ec-69b5bc041a8d%2Fvub37qq_processed.jpeg&w=3840&q=75)
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?
Expert Solution
![](/static/compass_v2/shared-icons/check-mark.png)
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps with 2 images
![Blurred answer](/static/compass_v2/solution-images/blurred-answer.jpg)
Recommended textbooks for you
Principles of Accounting Volume 2
Accounting
ISBN:
9781947172609
Author:
OpenStax
Publisher:
OpenStax College
Principles of Accounting Volume 2
Accounting
ISBN:
9781947172609
Author:
OpenStax
Publisher:
OpenStax College