Q328
Future value of interest if it is calculated once a year is classified as
A.
One time compounding
B.
annual compounding
AnswerC.
semi-annual compounding
D.
monthly compounding
Answer: Option B
Solution
Answer: Option B
Solution:
Future value of interest if it is calculated once a year is classified as annual compounding. Future value is the value of an asset at a specific date. It measures the nominal future sum of money that a given sum of money is "worth" at a specified time in the future assuming a certain interest rate, or more generally, rate of return; it is the present value multiplied by the accumulation function.