Fv pv pv x i x n fv pv 1 inn fv pv x 1 inn simple

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FV = PV + (PV x I x N) FV = PV / (1 + I)NN FV = PV x (1 + I)NN Simple interest? FV = PV x (PV x I x N)
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FV = PV + (PV x I x N) FV = PV x I x N Identify whether the following statements about the simple and compound interest methods are true or false. Statement True FalseAll other factors being equal, both the simple interest and the compound interest methods will accrue the same amount of earned interest by the end of the first year.After the end of the second year and all other factors remaining equal, a future value based on compound interest will never exceed the future value based on simple interest.The process of earning compound interest allows a depositor or investor to earn interest on any interest earned in prior periods. Laura is willing to invest $30,000 for eight years, and is an economically rational investor. She has identified three investment alternatives (L, M, and P) that vary in their method of calculating interest and in the annual interest rate offered. Since she can only make one investment during the eight-year investment period, complete the following table and indicate whether Laura
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should invest in each of the investments. Note: When calculating each investment s future value, assume that all interest is earned annually. Do not round your intermediate calculations. The final value should be rounded to the nearest whole dollar. Investment Interest Rate and Method Expected Future Value Make this investment?L5% compound interest M4% �� simple interest P7% compound interest �� ��
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