CFA® Level 1 Exam: Future Cost Calculation

Future Cost of a Hamburger in 30 Years

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Question

If the cost of a hamburger is $1.99 today, what would it cost in 30 years, assuming the price increases at a rate of 8% per year, compounded annually?

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Explanations

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A. B. C. D. E.

D

Consider the $1.99 as a PV and solve for the FV. On the BAII Plus, press 30 N, 8 I/Y, 1.99 PV, 0 PMT, CPT FV. On the HP12C, press 30 n, 8 i, 1.99 PV, 0 PMT,

FV. Make sure the BAII Plus has the P/Y value set to 1.

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