CFA Level 1: Calculating the Number of Deposits for $200,000

How Many Deposits Are Needed to Reach $200,000 with $250 Monthly Deposits?

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Question

How many deposits of $250 a month, beginning next month, are needed before an account has $200,000 in it, assuming it had a balance of $0 at the beginning and that interest is 6% per year, compounded monthly?

Answers

Explanations

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A. B. C. D. E.

Explanation

One of the two dollar amounts must be entered as a negative number and the other as a positive number or an error will result. On the BAII Plus, press 6 divide 12

= I/Y, 0 PV, 250 PMT, 200000 +/- FV, CPT N. On the HP12C, press 6 ENTER 12 divide i, 0 PV, 250 PMT, 200000 CHS FV, n. Note that the HP12C returns a result of 323. Make sure the BAII Plus has the P/Y value set to 1.

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