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How much total interest will Martinez pay on this payment

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Question - Martinez Excavating Inc. is purchasing a bulldozer. The equipment has a price of $106,900. The manufacturer has offered a payment plan that would allow Martinez to make 10 equal annual payments of $21,300.00, with the first payment due one year after the purchase.

Required -

How much total interest will Martinez pay on this payment plan?

Martinez could borrow $106,900 from its bank to finance the purchase at an annual rate of 9%.

Should Martinez borrow from the bank or use the manufacturer's payment plan to pay for the equipment?

Reference no: EM132504554

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