CFA® Level 1 Exam Question: Compound Interest Calculation

How much will be in the account after 60 months?

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Question

If you deposit $500 today into an account paying 8% per year, compounded quarterly, how much will be in the account after 60 months?

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A. B. C. D. E.

E

There are 20 quarters in 60 months (60 divide 3 =). On the BAII Plus, press 20 N, 8 divide 4 = I/Y, 500 PV, 0 PMT, CPT FV. On the HP12C, press 20 n, 8 ENTER

4 divide i, 500 PV, 0 PMT, FV. Note that the answer will be displayed as a negative number. Make sure the BAII Plus has the value of P/Y set to 1.

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