Investments and loans base their interest calculations on one of two possible methods: the the rate, and the investment or deposit period-to the amount deposited or invested in order to compute the amount of interest. However, the two methods differ in their relationship between the variables. interest and interest methods. Both methods apply three variables-the amount of principal, the interest 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: Compound interest? Simple interest? 0 FV= PV + (PV x 1 x N) Identify whether the following statements about the simple and compound interest methods are true or false. Statement True False The process of earning compound interest allows a depositor or investor to earn interest on any interest earned in prior periods All other factors being equal, both the simple interest and the compound interest methods wi not generate the amount of earned interest by the end of the first year. After the end of the second year and all other factors remaining equal, a future value based on compound interest will exceed a future value based on simple interest. O