Question

6. MMF Value. Bart is a college student who has never invested his funds. He has saved $1,000 and has decided to invest it in a money market fund with an expected return of 2.0%. Bart will need the money in one year. The MMF imposes fees that will cost Bart $20 at the time he withdraws his funds. How much money will Bart have in one year as a result of this investment

Answer 1

Answer:

Results are below.

Explanation:

Giving the following information:

Initial investment (PV)= $1,000

Number of periods (n)= 1 year

interest rate (i)= 0.02

Withdrawal cost= $20

First, we will determine the future value (FV) of the investment:

FV= PV*(1 + i)^n

FV= 1,000*(1.02^1)

FV= $1,020

Now, how much is left for Bart:

Net amount= 1,020 - 20

Net amount= $1,000