CFA® Level 1: CFA® Level 1 Exam Question - Compound Interest Calculation

Compound Interest Calculation

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Question

How much would an original deposit of $2,500 grow to be after 6 and a half years, if the deposit earns interest at 8.5% per year, compounded monthly?

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A

On the BAII Plus, press 2500 PV, 0 PMT, 78 N, 8.5 divided by 12 = I/Y, then press CPT FV. On the HP12C, press 2500 PV, 0 PMT, 78 n, 8.5 ENTER 12 divide i, then press FV. The answer will be displayed as a negative number. Make sure that the BAII Plus has the P/Y value set to 1.

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