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can purchase a service contract for all of her major appliances for $180 a year. If the appliances are expected to last for 10 years and she earns 5 percent on her savings, what would be the future value of the amount Krista will pay for the service contract? Use

Respuesta :

Chrisnando

Answer:

$2,264.04

Explanation:

To find future value we use the formula:

Future Value = Annual payment × Future value annuity factor

Therefore,

[tex] FV = P * [((1+r)^n - 1) / r] [/tex]

Where P = Principal amount = $180

r = rate = 5% == 0.05

n = 10 years

[tex] = 180 *[((1+0.05)^1^0) / 0.05] [/tex]

[tex] = $180 * 12.578 [/tex]

= $2,264.04

Therefore the Future Value is $2,264.04

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