The future value of 1 will always be:
A) equal to 1
B) equal to the interest rate
C) greater than 1
D) less than 1

Question

Quizplus · Accepted Answer

The future value of 1 will always be greater than 1 because it takes into account the effect of compound interest. When an investment earns interest, the interest is added to the principal amount, and the principal and interest earn interest in the following periods. This results in an exponential growth of the investment, which leads to a future value that is greater than the initial amount.

The Future Value of 1 Will Always Be