CFA® Level 1 Exam: Savings Account Calculation

Savings Account Calculation

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Question

How much would you have in a savings account 12 months from now if you start with a balance of $1,000 today, make a deposit of $2,000 in 6 months and make another deposit 6 months after that of $3,000? Assume that interest accrues at 6% per year, compounded monthly.

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A. B. C. D. E.

C

Find the answer to this question by solving a couple of compound interest problems. Move the $1,000 to month 12, then move the $2,000 forward 6 months to month 12, then add $3,000. On the BAII Plus, press 12 N, 6 divide 12 = I/Y, 1000 PV, 0 PMT, CPT FV, which yields $1,061.68. Then press STO 1. Then press 6

N, 2000 PV, CPT FV, which yields $2,060.76. Then press + RCL 1 =. Make this number positive by pressing +/- and then press + 3000 = to see the answer. On the HP12C, press 12 N, 6 ENTER 12 divide i, 1000 PV, 0 PMT, FV. Then press STO 1. Then press 6 N, 2000 PV, FV. Then press RCL 1 +. Make this number positive by pressing CHS and then press 3000 + to see the answer.