Which schedule should the company accept

Reference no: EM132156850

Question: A forklift truck costs $29,000. A company agrees to purchase such a truck with the understanding that it will make a single payment for the balance due in 3 years. The vendor agrees to the deal and offers two different interest schedules. The first schedule uses an annual effective interest rate of 13%. The second schedule uses 12.75% compounded continuously.

(a) Which schedule should the company accept?

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

Reference no: EM132156850

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