Which of the Following Equations Is Used to Calculate the Future

question 47

Multiple Choice

Which of the following equations is used to calculate the future value of an investment?

• A) FV_n = PV ÷ (1 + i)ⁿ
• B) FV_n = PV × (1 + i)ⁿ
• C) FV_n = (1 + i)ⁿ + PV
• D) FV_n = (1 + i)ⁿ ÷ PV

---

Definitions:

Interest-Bearing Notes

Debt securities that pay interest to the holder at a fixed or variable rate until maturity.

Operating Cycle

The duration between the purchase of inventory and the collection of accounts receivable generated from sales.

Interest Expense

The cost incurred by an entity for borrowed funds, represented as an expense on the income statement, affecting net income.

Adjusting Entry

Journal entries made at the end of an accounting period to update income and expense accounts so that the income statement reflects the revenues earned and expenses incurred during the period.