Question

Assume that the variables I, N, and PV represent the interest rate, investment or deposit period, and present value of the amount deposited or invested, respectively. Which equation best represents the calculation of a future value (FV) using: compoud interest

Answer 1

Compound Interest

FV = PV x ( 1 + r)^n

Simple Interest

FV = PV + ( PV x I x N )

Step-by-step explanation:

Compound interest used the compounded effect in its equation and It is calculated by multiplying the present value of investment with the compounding effect formula.

Future Value = Present Value x ( 1 + Interest rate )^investment period

In simple Interest the interest on the present value for investment period is added in the present value amount to calculate the future value of the investment.

Future Value = Present Value + ( Present value x Interest rate x Investment period )