Why does the value of money in a savings account increase over time? A. because it earns interest B. because future value is always less than present value C. because it is not spent D. because future value is always equal to present value

Question

Adrienne Wood

Mathematics

11 December, 10:19

Why does the value of money in a savings account increase over time? A. because it earns interest B. because future value is always less than present value C. because it is not spent D. because future value is always equal to present value

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Answers (2)

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Shiloh Escobar · Answer 1

because it earns interest

Step-by-step explanation:

Plato

Dangelo Mann · Answer 2

A. because it earns interest

Step-by-step explanation:

The interest rate is the gaining that you make for keeping your money in the bank. Suppose you have $100 and the bank offers you a 5% annually interest rate. The rate (5%) means that your money will earn five percent of the value each year, so after the first year you will earn (5%) * ($100) = $5 of interest just for keeping your money in your savings account. Therefore, your money will grow overtime because it is earning interest. Remember that interest can be compound (over periods) or simple (like our example).