1.)Which increases future value? I. Decreasing the interest rate II. Increasing the interest rate III. Decreasing the amount of the lump sum investment

2.)

When we earn interest on prior interest earnings it's known as:

discounting.

compounding.

duplicating.

multiplying.

3.)

Which results in the largest future value?

5 percent simple interest

5 percent interest, compounded annually

4.)

Jim invested $100 today in an investment that pays 6 percent annual interest. Which is correct, assuming compounding of interest? Refer to the equations for present value and future value when answering these relationship questions.

He will earn the same amount of interest each year.

He could have the same future value and invest less than $100 initially if he could earn more than 6 percent interest.

His interest for year two will be equal to $100 0.06 2.

He will be earning simple interest