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compoundind and period As you increase the length of time involved, what happens to future values?...

compoundind and period As you increase the length of time involved, what happens to future values? what happens to present values?

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As you increase the length of time involved, the future value increase and the present value decreases

Future value is equal to the principal amount and the interest compounded on it. When the length of times increases, more interest will be compounded and as a result, future value will increase.

As you increase the length of time involved, the present value decreases

The present value is calculated by dividing the future amount by the interest rate i.e. it is basically the future amount minus the interest that will be earned. Hence, when time increases, more interest will be earned and hence, present value will decrease.

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