3.2. How much money will be in Brenda\'s money market fund at theend of two year

Question

3.2.   How much money will be in Brenda's money market fund at theend of two years if she makes no withdrawals and the interest rateremains at 7%? (Round your answer to the nearest dollar.) A.   $888 B.   $1,090 C.   $1,145 D.   $908 Is it C? Brenda saves $1,000 in her moneymarket fund. A money market fund is a mutual fund that invests inshort-term corporate or government debt. A money market fund isoften considered a substitute for a savings account. Money marketaccounts have a constant price of $1 per share and pay interest,just like a savings account. But money market accounts are notinsured and, therefore, have more risk than a savings account.Brenda's money market fund pays 7% interest.

Explanation / Answer

Present Value of Savings Amount $1,000 Interest rate 7% Number of years 2 Calculating Future Value(FV): (Using MS-Excel "FV" Function): Interest rate (Rate) 7% Number of Periods (Nper) 2 Present Value (PV) -$1,000 Future Value (FV) $1,144.90 Thus, the Option is (C) $1,145 Present Value of Savings Amount $1,000 Interest rate 7% Number of years 2 Calculating Future Value(FV): (Using MS-Excel "FV" Function): Interest rate (Rate) 7% Number of Periods (Nper) 2 Present Value (PV) -$1,000 Future Value (FV) $1,144.90

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