the process for converting present values into future values is calle.docx

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the process for converting present values into future values is called . This process requires nowledge of the values of three of four time-value-of-money variables. Which of the following is not one of these ariables? The duration of the deposit (N) The interest rate (1) that could be earned by deposited funds The present value (PV) of the amount deposited The trend between the present and future values of an investment All other things being equal, the numerical difference between a present and a future value corresponds to the amount of interest earned during the deposit or investment period. Each line on the following graph corresponds to an interest rate: 0%, 11%, or 21%. Identify the interest rate that corresponds with each line. VALUE IDollars) TIME Years 0 1 2 3 4 5 6 7 8 9 10 Line A: Line B: Line : 2 Investments and loans base their interest calculations on one of two possible methods: the interest and the interest methods. Both methods apply three variables-the amount of principal, the
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