QuestionJune 16, 2025

A Electrical Contractor uses a small loan to borrow money at 10% interest rate per annum to buy a vehicle that costs 2502 If the contractor pays a down payment of 421 and the debt is paid over a period of 10 months. What is the interest charged? (Calculate to 2 decimal places.) square

A Electrical Contractor uses a small loan to borrow money at 10% interest rate per annum to buy a vehicle that costs 2502 If the contractor pays a down payment of 421 and the debt is paid over a period of 10 months. What is the interest charged? (Calculate to 2 decimal places.) square
A Electrical Contractor uses a small loan to borrow money at 10%  interest rate per annum to
buy a vehicle that costs 2502
If the contractor pays a down payment of 421 and the debt is paid over a period of 10
months. What is the interest charged?
(Calculate to 2 decimal places.)
square

Solution
4.5(306 votes)

Answer

173.40 Explanation 1. Calculate the loan amount Subtract the down payment from the vehicle cost: 2502 - 421 = 2081. 2. Calculate annual interest Multiply the loan amount by the interest rate: 2081 \times 0.10 = 208.10. 3. Calculate monthly interest Divide the annual interest by 12 months: \frac{208.10}{12} = 17.34. 4. Calculate total interest for 10 months Multiply the monthly interest by 10: 17.34 \times 10 = 173.40.

Explanation

1. Calculate the loan amount<br /> Subtract the down payment from the vehicle cost: $2502 - 421 = 2081$.<br />2. Calculate annual interest<br /> Multiply the loan amount by the interest rate: $2081 \times 0.10 = 208.10$.<br />3. Calculate monthly interest<br /> Divide the annual interest by 12 months: $\frac{208.10}{12} = 17.34$.<br />4. Calculate total interest for 10 months<br /> Multiply the monthly interest by 10: $17.34 \times 10 = 173.40$.
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