Answer:
Future value = $755.61 ( to the nearest cent)
Step-by-step explanation:
The formula for calculating the future value of an invested amount compounded periodically for a number of years is given as:
[tex]FV = PV (1+\frac{r}{n} )^{n*t}[/tex]
where:
FV = future value = ???
PV = present value = $575
r = interest rate in decimal = 5.5% = 0.055
n = number of compounding periods per year = quarterly = 4
t = time of investment = 5 years
∴ [tex]FV = 575 (1+\frac{0.055}{4} )^{4*5}[/tex]
[tex]FV = 575 (1+0.01375)^{20}\\FV = 575 (1.01375 )^{20}\\FV = 575 * 1.3141\\FV = 755.607[/tex]
∴ Future value = $755.61 ( to the nearest cent)
