Question

If $10,000 is put in a savings account (only one time) paying interest of 4% compounded annually, what amount will be in the account at the end of 5 years? Future Value of 1 (4%, 5 periods) = 1.21665 Future Value of an Annuity of 1 (4%, 5 periods) = 5.41632 Present Value of 1 (4%, 5 periods) = 0.82193 Present Value of an Annuity of 1 (4%, 5 periods) = 4.45182 Group of answer choices $8,219.30 $12,000.00 $12,155.10 $12,166.50

Answer 1

$12,166.50

Step-by-step explanation:

The computation of the future value is shown below:

As we know that

Future value = Present value × (1 + interest rate)^number of years

= $10,000 × (1 + 0.04)^5

= $10,000 × 1.2166529024

= $12,166.50

We simply applied the above formula so that the future value could come by considering the present value, interest rate, number of years