How Much of the Equipment Cost Is Recovered Per Year

question 12

Multiple Choice

How much of the equipment cost is recovered per year if the purchase price of a new forklift is $78,000 and the average annual savings are expected to be $12,000?

• A) 13.278%
• B) 14.745%
• C) 15.385%
• D) 16.254%

---

Definitions:

Effective Interest Rate

The real rate of interest earned or paid on an investment or loan, taking into account the effect of compounding.

Finance Charge

A fee representing the cost of credit, or the cost of borrowing, including interest and other charges.

Annual Effective Rate

The annual rate that reflects the compounding of interest, offering a true reflection of the financial product's profitability.

Monthly Compounded

Interest calculation method where interest is added to the principal balance every month, increasing the amount on which future interest is calculated.