Question

At​ Petruske's Warehouse, the forklift needs major repair. A new forklift can be purchased at a current cost of ​$29000. If the new forklift is​ purchased, month-end payments of ​$690 would start in two​ years, and continue for five years. Interest for the first two years is charged at ​7.25% compounded annually. What is the monthly compounded interest rate for the payment​ period?

Answer 1

The student has asked to determine the monthly compounded interest rate for a payment period on a new forklift purchase but did not provide the annual interest rate during that period.

Step-by-step explanation:

The question asks to calculate the monthly compounded interest rate for the payment period of a new forklift that will be purchased for $29,000, with payments starting in two years. During the first two years, the interest rate is 7.25% compounded annually.

To find the equivalent monthly compounded interest rate, you would normally use the formula that relates the annual rate to the monthly rate, which is (1 + annual rate)^(1/12) - 1. However, since the problem does not provide the actual annual rate during the payment period, we can't calculate the exact monthly rate without it.

It's important to understand that compound interest can significantly impact the overall amount paid on a loan compared to simple interest, especially over longer periods and with larger amounts.