Doubling the future value will cause:
A)The present value to fall by half
B)The interest rate i, to double
C)No change to present value, only the interest rate
D)The present value to double

Question

Quizplus · Accepted Answer

To double the future value, we need to increase the present value. Therefore, option A is eliminated. Also, the interest rate i does not necessarily need to double to double the future value. So, option B is eliminated. Option C is also incorrect as it suggests that there is no change to present value. Thus, the correct answer is option D, which states that the present value will double to achieve a doubled future value, assuming that the interest rate remains constant.

Doubling the Future Value Will Cause