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Interest Rates and Time

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Discuss how interest rates (r) and time (t) play a role in the calculation of future value or present value. Show an example.

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Solution Summary

This solution discusses how changes in interest rates and time affect an investment's future value. An example is provided for each point discussed.

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The longer the period of time for returns to compound between the current date and the future date, the greater the future value will be.
- For example, if a party invests $100 today at 5 percent interest per year for 10 years, the future value of the investment will be $162.89
- However, if they invest the $100 for 15 years, the future value of the investment will be ...

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