3.1. How much is Brenda\'s account worth at the end of oneyear? A. $990 B. $1,15

Question

3.1.   How much is Brenda's account worth at the end of oneyear? A.   $990 B.   $1,150 C.   $1,200 D.   $1,070 Is it D? 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 1 Calculating Future Value(FV): (Using MS-Excel "FV" Function): Interest rate (Rate) 7% Number of Periods (Nper) 1 Present Value (PV) -$1,000 Future Value (FV) $1,070.00 Thus, the Options is (D) $1,070 Present Value of Savings Amount $1,000 Interest rate 7% Number of years 1 Calculating Future Value(FV): (Using MS-Excel "FV" Function): Interest rate (Rate) 7% Number of Periods (Nper) 1 Present Value (PV) -$1,000 Future Value (FV) $1,070.00

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