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29 December, 18:36

Framing Art Inc. will need to purchase two new cashier machines in 2 years, at a cost of $148 each. A savings account pays 2% per year compounded quarterly. How much should Framing Art Inc. deposit now in this account to have the cash available in 2 years to pay cash for both machines

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  1. 29 December, 20:56
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    Farming Art Inc. should deposit $284.42

    Explanation:

    Giving the following information:

    Framing Art Inc. will need to purchase two new cashier machines in 2 years, for $148 each. A savings account pays 2% per year compounded quarterly.

    Total cost=148*2 = $296

    To calculate the monetary value to deposit today, we need to use the following formula:

    PV = FV / (1+i) ^n

    FV = 296

    i = 0.02/4 = 0.005

    n=2*4 = 8

    PV = 296/1.005^8 = $284.42
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