The line of the team a protably the saglemos important consaptan. Manca magen. One of the molequently redication the couture vec The proces contingentuurlus is called Tour Royales. Whics at the town is not one of the This processen sowiedge of the value of the There was the amount The duration of met The dating the The state that we are to this being the receptentry Line C investments and loans bastante est calculations on one or two posible methods the interest and the methods and apply the variables-the amount of sendipal, there and time or dopoul perioda the mount detteder med and to be the most interest raw, the two methods dither in the rules Resume that the variables L. Na and Praxit the litermat vale vestment of thepisil period, and present viature of the ancerit deposited or Inlede Widge best the calculation of a fitur vering: O P = P21-1) FVV O T = PV - IN V - VP matter the following statements about the simple and compound triterst methods are true or false. Statement True False All the toto bong out, the implement and the compound interest methods will serve the same aroint of and test by the end of the furst year After the end of the second year and all the factors temaining equal, a future valle based on compound interest will never exceed the future valse based on simple internet Te process of earning compound interest allows a depositar or investor to eam interest on any interest samal in prior periods. o O 0 Nicholl welling to in 35,000 for six years, and is an economically rational Investor. He has identified the investment alternatives (Band) mat vary their method of calculating interest and in the annual interest rate offered. Since he can only make ane Lestment during the year tivement period, complete the following table and lesditate wellier Nicholashcauld invest in each of the investments Note: When calculating each investment future value, assume that all interest is camed ally. The final value should be rounded to the nearest while dollar Investment Interest Rate and Method Expected Future Value Make this investment? simple interest 1 compound interest o comport The principal of the time value of money is probably the single most important concept in financial management. One of the most frequently encountered applications involves the calculation of a future value. The process for converting present values into future values is called four time-value-of-money variables. Which of the following is not one of these variables? This process requires knowledge of the values of three of The present value (PV) of the amount invested The duration of the investment (N) The inflation rate indicating the change in average prices The interest rate (1) that could be eamed by invested funds All other things being equal, the numerical difference between a present and a future value corresponds to the amount of interest eamed during the deposit or investment period. Each line on the following graph corresponds to an interest rate: 0%, 11% or 21%. Identify the interest rate that corresponds with each line. VALUE Dollars 8 0 1 2 3 4 5 6 2 8 9 10 TIME (Yearsi Line A: Line B: Line C: Investments and loans base their interest calculations on one of two possible methods: the interest and the interest methods. Both methods apply three variables--the amount of principal, the interest 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. Assume that the variables I, N, and PV represent the interest rate, investment or deposit period, and present value of the amount deposited on invested, respectively. Which equation best represents the calculation of a future value (FV) using; Compound interest? O FV = PV x (1 + 1)N FV = PV + (PV I XN) ed OFV = PV / (1+1)N Simple interest? OFV = PV + (PVxIxN) O FV = PV XIXN O FV = PV / (PV XIX N)