Suppose a relative has promised to give you $1,000 as a wedding gift the day you get engaged. assuming a constant interest rate of 10%, consider the present and future values of this gift, depending on when you become engaged.

The value of the gift in one year = $1100

The value of the gift in two years = $1200

When we save money in a bank, we get interest, so our money increases.

There are two types of flowers, i.e.

if the only interest is the capital

if interest is earned on the interest.

Bank interest is usually calculated in percent for 1 year.

For example, 10% interest, then our savings will get 10% interest if we have saved money in the bank for 1 year

Common formulas that can be used:

   = x 1- year interest

The value of the gift in one and two years if you become engaged today

= capital + interest 1 year

= 1000 + 1000 x 10%

= 1000 + 100

= $1100

= capital + interest 2 years

= capital + 1000 x 20%

= 1000 + 200

= $1200

So The future value of the gift is bigger if you get engaged in one year than it is if you get engaged in two years.

the amount of interest earned

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A savings account

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interest rate affect money earned on a savings account

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Keywords: interest, capital, savings, bank, engaged

answer; ///blank(1); rate-buster; blank(2) systematic soldiering;