CFA Level 1 Exam: Compound Interest Calculation

Compound Interest Calculation for Savings Account

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Question

If you deposit $1,400 today into a savings account paying 8% per year, compounded semiannually, how much is in your account in 5 years?

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A

On the BAII Plus, press 10 N, 8 divide 2 = I/Y, 1400 PV, 0 PMT, CPT FV. On the HP12C, press 10 n, 8 ENTER 2 divide i, 1400 PV, 0 PMT, FV. Note that the answer will be displayed as a negative number. Make sure the BAII Plus has the P/Y value set to 1.