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A public procurement contract is valued at €2,400,000 over 4 years. The contractor receives 20% of the total value as an upfront payment. The remaining amount is paid in equal annual instalments over the 4 years. How much does the contracting authority pay in the second year?
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Explanation
Step 1: Upfront payment = 20% × €2,400,000 = €480,000. Step 2: Remaining amount = €2,400,000 − €480,000 = €1,920,000. Step 3: Annual instalment = €1,920,000 ÷ 4 = €480,000. Step 4: The second year payment is one annual instalment = €480,000.