Suppose you put $500 into a bank account today.Interest is paid annually and the annual interest rate is 3%.The future value of the $500 in 5 years to the nearest cent is
A)$575.00
B)$578.81
C)$579.64
D)None of the above is correct.

Question

Quizplus · Accepted Answer

To find the future value, we use the formula:
FV = PV(1+r)^n
where PV is the present value, r is the annual interest rate, n is the number of compounding periods, and FV is the future value.

Substituting the given values, we get:
FV = 500(1+0.03)^5
FV = 500(1.03)^5
FV = 500(1.159274)  [rounding to 6 decimal places]
FV = $579.64 to the nearest cent

Therefore, the best choice is C.

Suppose You Put $500 into a Bank Account Today