CFA Level 1: Time to Grow Initial Deposit to $4,000

Calculating the Time Required for an Initial Deposit to Grow to $4,000 at 5% Interest

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Question

How long will it take for an initial deposit of $1,500 to grow to be $4,000, if the interest rate is 5% per year, compounded annually?

Answers

Explanations

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A. B. C. D. E.

B

Either the $1,500 or the $4,000 must be entered as a negative number - it won't matter which. On the BAII Plus, press 5 I/Y, 1500 PV, 0 PMT, 4000 +/- FV, CPT N.

On the HP12C, press 5 i, 2500 PV, 0 PMT, 4000 CHS FV, n. Note that the HP12C will indicate 21 years for the answer. Make sure the BAII Plus has the P/Y value set to 1.

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