When computing an interest or growth rate, the rate will decrease with an increase in future value, holding present value and the number of periods constant.

Question

Quizplus · Accepted Answer

The statement is incorrect. When computing an interest or growth rate, the rate will increase with an increase in future value, holding present value and the number of periods constant. This can be seen in the formula for calculating interest rate: rate = (FV/PV)^(1/n) - 1, where FV is future value, PV is present value, n is the number of periods, and the rate increases as FV increases.

When Computing an Interest or Growth Rate, the Rate Will