CFA Level 1 Exam: Semiannual Deposits to Accumulate $7,000 in 5 Years

Semiannual Deposits Calculation for CFA Level 1 Exam

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Question

What semiannual deposits are needed to accumulate $7,000 in 5 years if the account pays 6% per year, compounded semiannually, assuming that the first deposit is made in 6 months and also assuming that the account already has $1,750 in it today?

Answers

Explanations

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A

On the BAII Plus, press 10 N, 6 divide 2 = I/Y, 1750 PV, 7000 +/- FV, CPT PMT. On the HP12C, press 10 n, 6 ENTER 2 divide i, 1750 PV, 7000 CHS FV, PMT.

Note that the answer this time is a positive number. This means that the $405.46 is a deposit in addition to the $1,750 original deposit. The $7,000 is entered as a negative number, because the $1,750 and the $405.46 are deposits and the $7,000 is a withdrawal. Make sure the BAII Plus has the value of P/Y set to 1.

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