QuestionJune 16, 2025

A Electrical Contractor uses a small loan to borrow money at 12% interest rate per annum to buy a vehicle that costs 16800 If the contractor pays a down payment of 2200 and the debt is paid over a period of 12 months. What is the interest charged? (Calculate to 2 decimal places.)

A Electrical Contractor uses a small loan to borrow money at 12% interest rate per annum to buy a vehicle that costs 16800 If the contractor pays a down payment of 2200 and the debt is paid over a period of 12 months. What is the interest charged? (Calculate to 2 decimal places.)
A Electrical Contractor uses a small loan to borrow money at 12%  interest rate per annum to
buy a vehicle that costs 16800
If the contractor pays a down payment of 2200 and the debt is paid over a period of 12
months. What is the interest charged?
(Calculate to 2 decimal places.)

Solution
4.4(359 votes)

Answer

The interest charged is \ 1752.00. Explanation 1. Calculate the Principal Amount Subtract the down payment from the vehicle cost: 16800 - 2200 = 14600. 2. Calculate Annual Interest Use the formula for simple interest: **Interest = Principal \times Rate \times Time**. Here, Principal = 14600, Rate = 0.12, Time = 1 year. Interest = 14600 \times 0.12 \times 1 = 1752.

Explanation

1. Calculate the Principal Amount<br /> Subtract the down payment from the vehicle cost: $16800 - 2200 = 14600$.<br /><br />2. Calculate Annual Interest<br /> Use the formula for simple interest: **Interest = Principal \times Rate \times Time**. Here, $Principal = 14600$, $Rate = 0.12$, $Time = 1$ year.<br /> Interest = $14600 \times 0.12 \times 1 = 1752$.
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