ASAP

LEXI: S0, why is it important to be able to calculate the future value of some amount inverted? LUKE! First, remember that the amount invested is usually called. , and the amount earned during the investment period a cailed - It is important to be able to calculate a future value so that yeu can know in advance what a given amount of principal wil be worth after earning a specified for a known LEXI: OK, I understand that, and 1 . know the amount of princlpal invested today can be called the value of the investment, whereas the ampunt realized after the passage of t period of time is calied its be different values? value. But what causes the present and future values to Luke: Two things cause the present and future values to be different ameunts, First, the earned during the investinent period casses the future value to be greater than, equal to, or less than the present value. Second, the method used to calculate the intereat. earned-that is, whether the account pays interest-determines the amount by which the future value differs from the present value. LEXI: That makes sense, and I remember Dr. Phillips saying that the difference between simple and compound interest is that in the case of interest, interest is earned solely an the invested principal, but in the case of interest, interest is eamied not any on the principal but also on previously earned interest. LUKE: Very goodi:So, here's your next question. Assuming equal amounts of peincipal, interest rates, and investment periodi, which type of acceunt should produce the greater future value: the account caming simple interest or the account eaming compound interest? Lext: by my reasoning, the account earning interest should hove the greater future value, assuming identical amounts of pencipal, interest rates, and hvestment perieds