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Effects of Interest Rates on Future and Present Value

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What impact do interest rates have on the calculation of future and present value? How does the length of time affect future and present value?

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Solution Summary

200 words on the impact of interest rates and length of time on future and present values.

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Simple interest is interest on the principle amount while compound interest is when your principle and any earned interest earned interest. The interest rate is applied to the original principle and any accumulated interest.

Compound interest is critical to investment growth. With simple interest, interest is paid just ...

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