The higher the interest rate used in determining the future value of a $1 annuity,
A) the smaller the future value at the end of the period.
B) the greater the future value at the end of a period.
C) the greater the present value at the beginning of a period.
D) None of these options. The interest has no effect on the future value of an annuity.

Question

Quizplus · Accepted Answer

The higher the interest rate, the more interest earned on each payment in the annuity, leading to a larger future value at the end of the period.

The Higher the Interest Rate Used in Determining the Future