Which of the following factors can cause the future value of an investment to decrease?

The future value of an investment reflects the amount that an investment will grow over time at a given interest rate. One significant factor that can cause the future value to decrease is increased inflation over time.

Inflation erodes the purchasing power of money, meaning that even if the nominal value of your investment grows, the real value—what that money can actually buy—may decline. For instance, if you have an investment that grows at a rate of 5% per year, but inflation is at 3%, your real growth is only about 2%. Over time, if inflation continues to rise, even a well-performing investment can lose its effectiveness in terms of real purchasing power. Thus, higher inflation diminishes the future value in terms of the goods and services that the money can purchase in the future.

In contrast, factors such as an extended time period with constant interest or higher interest rates tend to enhance future value. Decreasing the number of compounding periods could potentially reduce the future value, but it's not as impactful as inflation in general economic scenarios where inflation rates are notably high. Hence, while there are various dynamics at play, increased inflation fundamentally diminishes the future value of investments in real terms.