Question

Find the compound interest and future value. Do not round intermediate steps. Round your answers to the nearest cent. Principal Rate Compounded Time $805 5% Annually 12 years The future value is and the compound interest is $ X

Answer 1

To calculate the future value and compound interest for a principal of $805 at a 5% annual interest rate over 12 years, we use the compound interest formula. The future value equals $1,445.65 and the compound interest is $640.65 after rounding to the nearest cent.

Step-by-step explanation:

To calculate the future value and compound interest of an investment, we can use the following formulas:

Future Value = Principal × (1 + interest rate)time

Compound Interest = Future Value - Principal

In this case, the principal is $805, the annual interest rate is 5% (or 0.05 as a decimal), and the time is 12 years.

Now, let's use these formulas:

1. Calculate the future value: $805 × (1 + 0.05)12.
2. Calculate the compound interest by subtracting the original principal from the future value.

For the given values, the future value would be calculated as follows:

Future Value = $805 × (1 + 0.05)12 = $805 × 1.795856326022>
= $1,445.65 (rounded to the nearest cent)

The compound interest is then:

Compound Interest = $1,445.65 - $805
= $640.65 (rounded to the nearest cent)