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Question - Flounder Excavating Inc. is purchasing a bulldozer. The equipment has a price of $96,700. The manufacturer has offered a payment plan that would allow Flounder to make 8 equal annual payments of $18,790.86, with the first payment due one year after the purchase.
How much total interest will Flounder pay on this payment plan?
Flounder could borrow $96,700 from its bank to finance the purchase at an annual rate of 10%.
Should Flounder borrow from the bank or use the manufacturer's payment plan to pay for the equipment?
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