Suppose the annual rate of interest is r%. Which of the following statements is then true of the future value of $1,000 for a time of T years?
A) Irrespective of whether the sum of $1,000 is borrowed or lent, the future value in both cases will equal (1 - r)T × (1,000).
B) Irrespective of whether the sum of $1,000 is borrowed or lent, the future value in both cases will equal (1 + r)T × (1,000).
C) If $1,000 is borrowed, the future value will equal (1 + r)T × (1,000), but if it is lent out, the future value will equal (1 - r)T × $1,000.
D) If $1,000 is borrowed, the future value will equal (1 - r)T × (1,000), but if it is lent out, the future value will equal (1+ r)T × $1,000.
B
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