SOLUTION: If the interest is zero, the future value interest factor equals a. -1 b. 0 c. 1 d. 2 I choose b.; because according to the future value interest factor table interest sta

Question 251881: If the interest is zero, the future value interest factor equals
a. -1
b. 0
c. 1
d. 2
I choose b.; because according to the future value interest factor table interest starts at 1%. Can you tell me if this is correct? Also if the answer is different can you show solution step by step?
Answer by solver91311(24713) (Show Source): You can put this solution on YOUR website!

Think about it this way. Let's say you are my REALLY good friend and you are going to loan me $1000 at zero interest for a year. What do I owe you at the end of the year?

1000 times -1 = -1000, meaning you owe me ANOTHER $1000

1000 times 0 = 0, meaning I owe you nothing

1000 times 1 = 1000, meaning I've got to give you your original 1000 back

or

1000 times 2 = 2000, meaning you actually charged me 100% interest

John

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