CFA Level 1: Compound Interest Calculation

Compound Interest Calculation

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Question

How many quarters will it take for an original $1,000 deposit to grow to be $2,000, if the deposit earns interest at 6% per year, compounded quarterly?

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A. B. C. D. E.

E

On the BAII Plus, press 1000 PV, 2000 +/- FV, 0 PMT, 6 divided by 4 = I/Y, then CPT N. On the HP12C, press 1000 PV, 2000 CHS FV, 0 PMT, 6 ENTER 4 divide i, then press n. HP12C answer is shown as 47. Answer should be in quarters, not years. Make sure the BAII Plus has the P/Y value set to 1.