CFA® Level 1 Exam Question: Retirement Savings Calculation

Retirement Savings Calculation

Prev Question Next Question

Question

Kevin wants to retire a millionaire. If he is 45 years old today and already has $80,000 in the bank, what monthly deposit would he need to make beginning one month from today and continuing until he retires on his 65th birthday, if the money will earn 8% per year, compounded monthly?

Answers

Explanations

Click on the arrows to vote for the correct answer

A. B. C. D. E.

A

The total number of deposits will be 240 (20 years x 12 months/year). On the BAII Plus, press 240 N, 8 divide 12 = I/Y, 80000 PV, 1000000 +/- FV, CPT PMT. On the HP12C, press 240 n, 8 ENTER 12 divide i, 80000 PV, 1000000 CHS FV, PMT. Note that the answer will be displayed as a negative number. Make sure the

BAII Plus has the P/Y value set to 1.

Prev Question Next Question