Final answer:
The future value of $1,000 at 4% interest compounded annually after five years is $1,216.65.
Step-by-step explanation:
The question asks for the future value of $1,000 invested at a 4% annual interest rate, compounded annually after five years.
To calculate the future value (FV) in such a case, we use the compound interest formula: FV = P(1 + r/n)^(nt), where P is the principal amount ($1,000), r is the annual interest rate (0.04), n is the number of times interest is compounded per year (1 for annually), and t is the number of years the money is invested (5).
Substituting the given values, we get: FV = $1,000(1 + 0.04/1)⁵ = $1,000(1.04)⁵.
Now, calculating the power: (1.04)⁵ = 1.2166529.
So the future value after five years is: FV = $1,000 * 1.2166529 = $1,216.65.