Which schedule should the company accept

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Reference no: EM131811582

A truck costs $36,000. A company agrees to purchase this truck with the understanding that it will make a single payment for the balance due in three years. The salesman agrees to the deal and offers two different interest schedules. The first schedule uses an annual effective interest rate of 11%. The second schedule uses 12.65% compounded continuously.

(a) Which schedule should the company accept?

(b) What would be the size of the single payment?

Reference no: EM131811582

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