The future value of a dollar 1. Increases with higher IR 2. Decreases with highe

Question

The future value of a dollar 1. Increases with higher IR 2. Decreases with higher IR 3. Increases as the time period increases 4. Decreases as the time period increases A. 1&3 B. 1&4 C. 2&3 D. 2&4 The future value of a dollar 1. Increases with higher IR 2. Decreases with higher IR 3. Increases as the time period increases 4. Decreases as the time period increases A. 1&3 B. 1&4 C. 2&3 D. 2&4 1. Increases with higher IR 2. Decreases with higher IR 3. Increases as the time period increases 4. Decreases as the time period increases A. 1&3 B. 1&4 C. 2&3 D. 2&4

Explanation / Answer

Solution.

B. 1&4

1. Increases with higher IR

4. Decreases as the time period increases.

The impact of inflation is to determine the value of today's dollar in the future. For instance, $100 that you have today, in 15 years given a three percent inflation rate, would be worth only $64.19. Inflation over time does erode the value of money.

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