Question: Why do we not determine the effective annual rate, but instead went to find the future value of compounding in 1 year? Are they not

Why do we not determine the effective annual rate, but instead went to find the future value of compounding in 1 year? Are they not the same?

Calculating Future Values [L01] You have an investment that will pay you .74 percent per month. How much will you have per dollar invested in one year? In two years? Step-by-step solution Step 1 of 3 A Future Value Future value refers to the future worth am unt of present investment after one or more periods. Following formula is used to calculate future value: FV= PV(1 + r) Here, The future value is FV. The present value is PV. The discount or interest rate is r. The time is t

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