CFA® Level 1: Compound Interest Calculation

How many monthly payments are needed to pay off a debt of $1,000 at 10% annual interest?

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Question

How many monthly payments of $30, beginning next month, are needed to pay off a debt of $1,000, if interest accrues at 10% per year, compounded monthly?

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D

On the BAII Plus, press 10 divide 12 = I/Y, 1000 PV, 30 +/- PMT, 0 FV, CPT N. On the HP12C, press 10 ENTER 12 divide i, 1000 PV, 30 CHS PMT, 0 FV, n. Note that the HP12C will display 40 as the answer. Make sure the BAII Plus has the value of P/Y set to 1.