Final answer:
The future amount of a $1,000 investment at an annual interest rate of 1.25%, compounded annually for 4 years, is $1,050.98. The formula for compound interest, Principal × (1 + interest rate)time, is used to calculate the compound amount.
Step-by-step explanation:
To determine the future amount (compound amount) of a principal of $1,000 invested at an annual interest rate of 1.25% compounded annually for 4 years, we use the formula for compound interest:
Future Amount = Principal × (1 + interest rate)time
Plugging in the values:
Future Amount = $1,000 × (1 + 0.0125)4
Calculating the parentheses first:
Future Amount = $1,000 × (1.0125)4
Now calculate the power:
Future Amount = $1,000 × 1.05098
Finally, we multiply the principal by this factor to find the amount:
Future Amount = $1,050.98
Therefore, the future amount after 4 years will be $1,050.98.