Future Value of Account A Note: Account A pays simple interest. Future Value = Principal + Interest Principal +[(Principal x Interest Rate) x Investment Period] = $2,000+ [($2,000 x 7%) x 3 years] = $ Future Value of Account X Note: Account X pays compound interest. Future Valuex Present Value x Interest Rate Factor = Present Value x (1 + Interest Rate) = $2,000 x (1 + 0.07) = $ To find the interest rate factor, you can use four different ways, including multiplying it out: Interest Factor (1+0.07) x (1 + 0.07) x (1+0.07) = 1.2250 Or you can use exponents, and calculate it directly: Interest Factor = (1 + 0.07)3 = 1.2250 The third alternative for solving the equations is to use a spreadsheet, and the fourth is to let a financial calculator perform the calculation. This requires that you know how your calculator functions and how to enter the following variables: