Personal Finance 1st Edition by Jack R. Kapoor

Exercise 5

Calculating Future Value. You can purchase a service contract for all of your major appliances for $180 a year. If the appliances are expected to last for 10 years and you earn 5 percent on your savings, what would be the future value of the amount you will pay for the service contract? (Obj. 1)

Step 1 of 2

Calculate the Future value:

Future value is the value obtained by compounding the present value of annuity payments and the principal at the given discount rate and the number of years.