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.

Question

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.