Question

Camille put $1,250 in a new account at her bank. - The bank pays 2.25% interest compounded annually on this account. - Camille makes no additional deposits or withdrawals. Which amount is the closest to the balance of the account at the end of 5 years?

Answer 1

FV= $1,397.1

Explanation:

Giving the following information:

Initial investment (PV)= $1,250

Interest rate (i)= 2.25% compounded annually

Number of periods (n)= 5 years

To calculate the future value, we need to use the following formula:

FV= PV*(1+i)^n

FV= 1,250*(1.0225^5)

FV= $1,397.1