# Assume that Pearl Williams desires to accumulate $750,000 in 14 years using her money market fund... ## Question: Assume that Pearl Williams desires to accumulate$750,000 in 14 years using her money market fund balance of $105,996. At what interest rate must Pearl's investment compound annually? ## Future Value: An amount of$1 expected at a future date of say at the end of 10 years, refers to the $1 as the future value of the money. It is to e estimated that what amount should be invested today, that along with compounded interest would become$1 at the end of 10 years.

#### Computation of interest rate required for the desired fund:

Desired fund balance = $750,000 Number of years for which deposits to be remained invested = 14 years Deposit amount at the beginning of the year 1 =$105,996

So, the future value factor of $1 for a single sum = Desired fund balance / initial investment =$750,000 / $105,996 = 7.0757 Looking at the future value of a single sum table, the future value factor of 7.0757 corresponds to 15% for the period of 14 years. So, the interest rate at which the investment is to be compounded annually to meet desired fund balance of$750,000 = 15%