Question

future value. kyle has $1,500 in cash received for high - school graduation gifts from various relatives. he wants to invest it in a certificate of deposit (cd) so that he will have a down - payment on a car when he graduates from college in five years. his bank will pay 3.7% per year, compounded annually. how much will kyle have in five years to put down on his car? (ignore the effect of income taxes and round your answer to the nearest cent.) in five years, the amount kyle will have to put down on his car is $ (round to the nearest cent.) although the result the calculator returns may be a negative number, the amount should be stated as a positive value. using the calculator, enter values (?) from the question into your calculator.

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compute (cpt)
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Explanation:

Step1: Identify the compound - interest formula

The future - value formula for compound interest is $FV = PV(1 + r)^n$, where $PV$ is the present value, $r$ is the interest rate per period, and $n$ is the number of periods. Here, $PV=\$1500$, $r=\frac{3.7\%}{1}=0.037$ (since it is compounded annually), and $n = 5$.

Step2: Substitute the values into the formula

$FV=1500\times(1 + 0.037)^5$.
First, calculate $(1 + 0.037)^5=(1.037)^5$.
$(1.037)^5=1.037\times1.037\times1.037\times1.037\times1.037\approx1.20766$.
Then, $FV = 1500\times1.20766=\$1811.49$.

Answer:

$1811.49$