Homework Answers
Future Value = Present Value(1+interest rate)No of periods
Higher Interest rate will increase the future value of Investment as
Lets assume r = 6%
Future Value = $100(1+0.06)1 = $ 106
Now, a higher r of 7%
Future Value = $100(1+0.07)1 = $ 107
Thus, Higher Interest rate will increase the future value of Investment.
Hence, OPTION B. increase the future value of Investment.
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