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:

Weighted Average Method

A cost accounting method that averages all costs of inventory available for sale during the period regardless of purchase date, to determine the cost of goods sold and ending inventory.

Weight Factors

Variables or coefficients assigned in a calculation or analysis to reflect the importance or influence of different elements.

Physical Measures

Quantitative indicators used to assess the physical aspects of a business, such as volume of production or quantity of materials used.

Market Value

The present cost for purchasing or selling a product or service in a market.