Wilfredo bought a new boat for 18100 He paid 2500 for the do

Wilfredo bought a new boat for $18,100. He paid $2500 for the down payment and financed the rest for 10-years at an annual rate of 12%. The monthly payments on a $1000 loan at 12% for 10 years is $14.35. Find the total interest paid on the loan.

Solution

The loan taken by Wilfredo = Cost of the Boat - Downpayment = $ 18100 - $ 2500 = $ 15600.

The monthly payments on a $1000 loan at 12% for 10 years is $14.35.Therefore the monthly payments on a $15600 loan at 12% for 10 years is ( $14.35)(15600/1000) = $ 223.86. Since the loan is for 10 years, i.e. 120 months, the total amount paid by Wilfredo is 120* $ 223.86 = $ 26863.20. Then, the total interest paid by Wilfredo is $ 26863.20 - $ 15600 = $ 11263.20 .