What is the formula you should use to determine a bank account's future value in one year?
A) Future value equals the present value multiplied by one plus the rate of interest in decimals.
B) Future value equals the present value divided by one plus the rate of interest in decimals.
C) Future value equals the present value plus the rate of interest.
D) Future value equals the present value minus the rate of interest.
Question 2
Why is a dollar today more valuable than a dollar a year from now?
A) The unknown future is riskier than the known present.
B) The dollar today can be immediately used to buy something.
C) A dollar a year from now will likely have less purchasing power because of inflation.
D) all of the above
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