The future value increases with increases in the interest rate or the period of time funds are left on deposit.

Question

Quizplus · Accepted Answer

This is the concept of compounding interest, where the interest earned on an initial deposit (principal) is added back to the principal balance, resulting in a larger future value. The higher the interest rate or the longer the period of time the funds are left on deposit, the greater the future value will be.

The Future Value Increases with Increases in the Interest Rate