What is the future value of $1,000 invested today at an annual interest rate of 5% for four years?

Expert Solution

Assuming Compounding of Interest

Future Value

= Present Value x ( 1 + Rate of interest) ^ Number of periods

Where, Present Value = $1,000

Rate of interest = 5% or 0.05

Number of periods = 4 Years

So, Future Value

= $1,000 x [ 1.05 ^ 4 ]

= $1,000 x 1.215506

= $ 1,215.51

jeff jeffy answered 2 years ago

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