Answer:
$1,104( one thousand, one hundred and four United states of America Dollar).
Step-by-step explanation:
Treasury Inflation Protection Securities (TIPS) is used for adjust the principal value of the bond yearly for inflation.
The coupon rate which is also known as the interest rate remains fixed.
Calculating the future value using compounding through;
Future Value or nominal value
= Principal x (1 + the inflation rate)^( number of years).
Therefore,
X = $1,000 x (1+.02)^5
= $1,104.
