Final answer:
The future value of a $1000 deposit at a 5% interest rate compounded annually after five years is approximately $1,276.28.
Step-by-step explanation:
For a $1000 deposit with a 5% interest rate compounded annually, the future value after five years can be calculated using the compound interest formula, which is A = P(1 + r/n)^(nt) . In this case, A is the amount of money accumulated after n years, including interest, P is the principal amount (the initial amount of money), r is the annual interest rate (in decimal form), n is the number of times that interest is compounded per year, and t is the time the money is invested for in years.
Given that the interest is compounded annually, our calculation will be straightforward. Plugging the numbers into the formula, we get A = $1000(1 + 0.05/1)^(1*5). Simplifying, we find that A = $1000(1 + 0.05)^5 = $1000 * 1.2762815625, which equals $1,276.28 approximately. Therefore, the future value of the deposit after five years will be about $1,276.28.