Question

The future value of a dollar​ ________ as the interest rate increases and​ ________ the longer the money remains invested. A. ​decreases; decreases B. ​increases; increases C. ​decreases; increases D. ​increases; decreases

Answer 1

B. ​increases; increases

Step-by-step explanation:

As the interest rate increases, the money invested today will bring higher interest in the future.

For example if you lend $1,000 and the interest rate is 4% you will receive $1,040 after one year, if the interest rate is 6% your money will become $1,060

Future value should be higher the longer money is invested because the borrower should be able to do more activities that bring profit.

For example if you lend $1,000 and the interest rate is 4% you will receive 1,000x(1+0.04) = $1,040 dollars after one year and 1,000x
`1.04^(2)` = $1081 after 2 year