CFA Level 1: Calculate Deposit for Monthly Withdrawals

Calculate Deposit for Monthly Withdrawals

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Question

What deposit would you need to make today in order to withdraw $100 a month for the next 5 years, beginning next month, if the deposit will accrue interest at 8% per year, compounded monthly?

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Explanations

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A. B. C. D. E.

E

On the BAII Plus, press 60 N, 8 divide 12 = I/Y, 100 PMT, 0 FV, CPT PV. On the HP12C, press 60 n, 8 ENTER 12 divide i, 100 PMT, 0 FV, PV. The answer will be displayed as a negative number. Make sure the BAII Plus has the value of P/Y set to 1.

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