Valley Rendering, Inc. is considering purchasing a new flotation system for grease recovery. The company can finance
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Valley Rendering, Inc. is considering purchasing a new flotation system for grease recovery. The company can finance a $150,000 system at 5% per year compound interest or 5.5% per year simple interest. If the total amount owed is due in a single payment at the end of 3 years,
(a) Which interest rate should the company select, and
(b) How much is the difference in interest between the two schemes?
Compound InterestCompound interest (or compounding interest) is interest calculated on the initial principal, which also includes all of the accumulated interest from previous periods on a deposit or loan. Thought to have originated in 17th century Italy, compound...
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a Total due compound interest 150000105105105 173644 Total du...View the full answer
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