1. **Stating the problem:** You want to find out how much you will pay for the first year and for the years moving forward based on a payment plan for equipment priced at a certain amount. 2. **Understanding the payment plan:** - For the first 12 months (1 year), the interest rate is 5.95% per year. - After the first year, the interest rate changes to 12.95% per year. 3. **Formula for interest payment:** The interest payment for a year can be calculated as: $$\text{Interest Payment} = \text{Principal} \times \text{Interest Rate}$$ where Principal is the price of the equipment. 4. **Calculating the first year payment:** $$\text{First Year Payment} = \text{Principal} + (\text{Principal} \times 0.0595) = \text{Principal} \times (1 + 0.0595)$$ 5. **Calculating the payment for each year moving forward:** $$\text{Subsequent Year Payment} = \text{Principal} + (\text{Principal} \times 0.1295) = \text{Principal} \times (1 + 0.1295)$$ 6. **Explanation:** - You pay the principal amount plus the interest for that year. - The first year has a lower interest rate (5.95%). - From the second year onwards, the interest rate is higher (12.95%). If you provide the price of the equipment, I can calculate the exact amounts for you.