Answer:
$2,282.78
Explanation:
This is calculated as follows:
Step 1 = Calculation of Annual ATM fees
Annual ATM fees = Service fee × Number of times the ATM is used in a year
Annual ATM fees = $2 × 200 = $200
Step 1 = Calculation of Future Value (FV) of Annual ATM fees
FV = PV × {[(1 + r)^n - 1] ÷ r} .................................. (1)
Where;
PV = Present value of Annual ATM fees = $200
r = interest rate = 3% = 0.03
n = number of years = 10
Substituting the values into equation (1), we have:
FV = $200 × {[(1 + 0.03)^10 - 1] ÷ 0.03}
= $200 × {[(1.03)^10 - 1] ÷ 0.03}
= $200 × {[1.34391637934412 - 1] ÷ 0.03}
= $200 × {0.34391637934412 ÷ 0.03}
= $200 × 11.4638793114707
= $2,292.77586229415
FV = $2,282.78 approximately
Therefore, the future value in 10 years of the annual amount paid in ATM fees is $2,282.78.