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mel-nik [20]
3 years ago
6

An ATM with a service fee of $3 is used by a person 200 times in a year. What would be the future value in 5 years (use a 2 perc

ent rate) of the annual amount paid in ATM fees? Use
Business
2 answers:
Ierofanga [76]3 years ago
7 0

Complete question:

An ATM with a service fee of $3 is used by a person 200 times in a year. What would be the future value in 5 years (use a 2 percent rate) of the annual amount paid in ATM fees? Use Exhibit 1-B. (Round time value factor to 3 decimal places and final answer to 2 decimal places.)

Answer:

The future value of the annual amount paid in ATM fees is $662.40

Explanation:

FV = PV(1+i)^T

Where;

FV is the future value of the annual amount paid in ATM fees

PV is the present value of the annual amount paid in ATM fees

i is the interest rate

T is the time.

Given;

PV = $3 × 200 = $600

i = 2% = 0.02

T = 5 years

FV = 600(1+0.02)^5\\\\FV = 600(1.104)\\\\FV = 662.40

FV = $662.40

Therefore, the future value of the annual amount paid in ATM fees is $662.40

Eddi Din [679]3 years ago
6 0

Answer:

The future value in 5 years is $3,184.87  

Explanation:

The figure is arrived by calculating the future of the yearly total service of $600($3*200) by using applicable annuity factor for each of the years from year 1 to 5.

The annuity factor for each year is calculated as (1+r)^n, where r is the rate of return of 2% and the n the year in which the service fee relates to.

Kindly find attached for detailed computations.

Download xlsx
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