Question

A service contract for a video projection system costs $70 a year. You expect to use the system for five years. Instead of buying the service contract, what would be the future value of these annual amounts after five years if you earn 3 percent on your savings?A service contract for a video projection system costs $70 a year. You expect to use the system for five years. Instead of buying the service contract, what would be the future value of these annual amounts after five years if you earn 3 percent on your savings?

Answer 1

Answer:

future value of the video projection payment: 371.64 dollars

Explanation:

The future value of these payment will be calculate as ordinary annuity:

$C \times \frac{(1+r)^{time} -1}{rate} = FV$

C $ 70

time      5 years

rate 3% = 3/100 = 0.03

$70 \times \frac{(1+0.03)^{5} -1}{0.03} = FV$

FV $371.6395 = $ 371.64