Suppose the Annual Rate of Interest Is R Percent

question 80

Multiple Choice

Suppose the annual rate of interest is r percent.Which of the following statements is true of the future value of $1,000 for a time of T years?

• A) Irrespective of whether the sum of $1,000 is borrowed or lent, the future value in both cases will equal (1 ‒ r)ᵀ × $1,000.
• B) Irrespective of whether the sum of $1,000 is borrowed or lent, the future value in both cases will equal (1 + r)ᵀ × $1,000.
• C) If $1,000 is borrowed, the future value will equal (1 + r)ᵀ × $1,000, but if it is lent out, the future value will equal (1 ‒ r)ᵀ × $1,000.
• D) If $1,000 is borrowed, the future value will equal (1 ‒ r)ᵀ × $1,000, but if it is lent out, the future value will equal (1 + r)ᵀ × $1,000.

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