How Are Future Values Affected by Changes in Interest Rates

question 66

Multiple Choice

How are future values affected by changes in interest rates?

• A) The lower the interest rate, the larger the future value will be.
• B) The higher the interest rate, the larger the future value will be.
• C) Future values are not affected by changes in interest rates.
• D) One would need to know the present value in order to determine the impact.

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Definitions:

Direct Cost

Expenses that can be directly linked to the production of specific goods or services.

Indirect Cost

Costs that are not directly traceable to a specific product or activity, such as overhead, administration, and salaries for management.

Direct Materials

Raw materials that can be directly attributed to the production of specific goods or services and are considered a variable cost.

Factory Overhead

All indirect costs incurred during the manufacturing process, excluding direct materials and direct labor.