Determine the present value of the service contract

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ABC groundworks maintains shopping mall parking lots under a long-term 10 year contract. ABC is charging a flat-rate of $20,000 for year 1 and then it increases by $ 1,000 per year through year 10.

a) Determine the future worth at EOY 10 of the service contract at an interest rate of 5% per year.

b) Determine the present value of the service contract at an interest rate of 5% per year.

Reference no: EM13208479

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