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24 June, 19:51

A service contract for a video projection system costs $80 a year. You expect to use the system for four years. Instead of buying the service contract, what would be the future value of these annual amounts after four years if you earn 2 percent on your savings

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  1. 24 June, 20:57
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    The future value at the end of year 4 will be $329.73

    Explanation:

    This can be found using the following annuity formula:

    Future Value = Present Value * Annuity Factor (@2% for 4 Years)

    Future Value = $80 * 4.121 = $329.73
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