PAYMENTS Sam Hinds, a local dentist, is going to remodel the dental reception area and add two new workstations. He has contacted A-Dec, and the new equipment and cabinetry will cost $20,000. A-Dec will finance the equipment purchase at 7.5% for 9 years.

What will Hinds have to pay in annual payments for this equipment and monthly payments (12 per year)?

Compare the annual cash outflow of the two payments.

Why does the monthly payment plan have less total cash outflow each year?