If you invest $100 today and have $112 in one year, what is the $112 called?

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Prepare for the TExES Business and Finance 276 Test. Study with flashcards and multiple choice questions, each with hints and explanations. Get ready for your exam!

Multiple Choice

If you invest $100 today and have $112 in one year, what is the $112 called?

Explanation:
The key idea is what money will be worth at a future date. The $112 you have in one year is the amount your initial $100 grows to, so it’s the future value of the investment. Present value would be the amount you’d need today to reach a given future amount, inflation-adjusted value would adjust for changes in purchasing power due to inflation, and the interest rate is the rate at which the investment grows rather than the dollar amount you end up with.

The key idea is what money will be worth at a future date. The $112 you have in one year is the amount your initial $100 grows to, so it’s the future value of the investment. Present value would be the amount you’d need today to reach a given future amount, inflation-adjusted value would adjust for changes in purchasing power due to inflation, and the interest rate is the rate at which the investment grows rather than the dollar amount you end up with.

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