Question

What is the future value of $550 deposited in an account for 5 years earning 11.56% interest compounded annually?

Answer 1

It is assumed that money is once deposited as it is written that it has been deposited for 5 years. It is not written that deposit is made each year so it is assumed as an one time Investment so it is an one time deposit for 5 years earning 11.56% compounded annually.

Future value= Present value ( 1+ r) ^n

r =Interest rates= 11.56% or .1156

n=Number of periods = 5 years as Annual compounding.

So future value = 550( 1+.1156) ^5

= $ 950.3973 or $950.40

So the future value of given amount will be $950.40.