Which of the following equations is correct?
A) Future value = Present value + (Present value x Periods)
B) Future value = Present value + (Present value x Interest rate)
C) Future value = Present value + (Present value + Interest rate)
D) Future value = Present value x (Present value + Interest rate)

Question

Quizplus · Accepted Answer

The correct formula for future value is B, where you add the interest earned to the present value. Option A is incorrect because you are multiplying periods by present value instead of interest rate, which gives an incorrect result. Option C is incorrect because you are adding interest rate instead of multiplying it by present value. Option D is also incorrect because it uses the wrong formula with the addition symbol instead of multiplying interest rate and present value.

Which of the Following Equations Is Correct