The future value of a dollar
1. increases with higher interest rates
2. decreases with higher interest rates
3. increases as the time period increases
4. decreases as the time period increases
A)1 and 3
B)1 and 4
C)2 and 3
D)2 and 4

Question

Quizplus · Accepted Answer

The future value of a dollar increases with higher interest rates because the amount of interest earned on the dollar grows as the rate increases. Additionally, the future value increases as the time period increases because there is more time for the interest to compound, leading to a larger amount.

The Future Value of a Dollar