Question

A new game system was priced at $500 when it was introduced to the market. Over the

next few years, the cost decreased by 7% each year. What was the cost of the gaming

system after two years?

Answer 1

FV= $436.72

Explanation:

Giving the following information:

Initial cost (PV)= $500

Decrease rate (d)= 7% per year

Number of periods (n)= 2 years

To calculate the future value after 2 years, we need to use the following formula:

FV= PV / (1 + d)^n

FV= 500 / (1.07^2)

FV= $436.72