Conceptual Overview: Explore the growth of $1 for different compound interest rates across time.

1. What is the future value of $1 in Period 4 when the interest rate is 5%?

1. $1.00
2. $1.16
3. $1.22
4. $1.63

2. If the interest rate were 10%, how many periods would it take for the future value to be worth $1.95?

1. 3 periods
2. 5 periods
3. 6 periods
4. 7 periods

3. Consider the future value of $1 in 10 periods when the interest rate is 5%. When the interest rate doubles to 10%, the future value:

1. Increases but by less than double
2. Exactly doubles
3. Increases by more than double
4. Cannot be determined

FVN=PV(1+I)N=$1(1+0.050)3.0=$1.16