On January 01, 2013, Kale Farms purchased a tractor for $20,000. The company signed a 6% installment note to pay off the debt with 48 monthly payments over four years. Each payment is $469.70. How much interest must be paid over the life of the loan?

Question

Quizplus · Accepted Answer

To find the total interest paid over the life of the loan, we can use the following formula:

Total Interest = Total Payments - Principal

The Principal is the amount borrowed, which in this case is $20,000.

The Total Payments can be found by multiplying the monthly payment by the total number of payments:

Total Payments = $469.70/month x 48 months = $22,541.60

Now we can calculate the total interest paid:

Total Interest = $22,541.60 - $20,000 = $2,541.60

Therefore, the answer is B.

On January 01, 2013, Kale Farms Purchased a Tractor for $20,000