Find the future value, using the future value formula and a calculator. (Round your answer to the nearest cent.)
$864 at 5.5% compounded quarterly for 5 years
i = .055/4 = .01375
n = 5(4) = 20
amount = 864(1.01375)^20 = ....
Great that's exactly what I got
1135.35
To find the future value using the future value formula and a calculator, you can use the following steps:
1. Identify the given variables:
- Principal (P) = $864
- Annual interest rate (r) = 5.5% (or 0.055)
- Compounding frequency (n) = 4 (since it is compounded quarterly)
- Time period (t) = 5 years
2. Use the future value formula:
FV = P * (1 + r/n)^(n*t)
3. Substitute the values into the formula:
FV = $864 * (1 + 0.055/4)^(4*5)
4. Simplify within the parentheses:
FV = $864 * (1 + 0.01375)^(20)
5. Calculate the exponent:
(1 + 0.01375)^(20) ≈ 1.2988
6. Multiply the principal by the result of the exponentiation:
FV ≈ $864 * 1.2988
7. Round the result to the nearest cent:
FV ≈ $1121.27
Therefore, the future value of $864 at 5.5% compounded quarterly for 5 years is approximately $1121.27.