CFA Level 1: Calculate Quarterly Deposits for $15,000 Balance

Calculate Quarterly Deposits for $15,000 Balance

Prev Question Next Question

Question

What quarterly deposit do you need to make each quarter, starting next quarter, over the next 10 years in order to have a balance of $15,000 in your account, assuming the account starts with $1,000 in it and that the interest rate is 6% per year, compounded quarterly?

Answers

Explanations

Click on the arrows to vote for the correct answer

A. B. C. D. E.

A

There are 40 quarters in 10 years (10 x 4 =). The payment to be solved for as well as the original $1,000 balance can be viewed as deposits into the account and hence given the same sign. The $15,000 amount at the end of the timeframe should be of the opposite sign. On the BAII Plus, press 40 N, 6 divide 4 = I/Y, 1000

PV, 15000 +/- FV, CPT PMT. On the HP12C, press 40 n, 6 ENTER 4 divide i, 1000 PV, 15000 CHS FV, PMT. Note that the answer will be displayed as a negative number. Make sure the BAII Plus has the value of P/Y set to 1.

Prev Question Next Question