- CFA Exams
- CFA Level I Exam
- Topic 1. Quantitative Methods
- Learning Module 2. Time Value of Money in Finance
- Subject 2. Fixed Income Instruments and the Time Value of Money
CFA Practice Question
What is the future value of the following regular (ordinary, deferred) annuity?
Payment frequency = annual, at the end of each year
Number of payments = 7
Interest rate = 4% per year
B. $2,014.07
C. $2,590.80
Payment amount = $255
Payment frequency = annual, at the end of each year
Number of payments = 7
Interest rate = 4% per year
A. $1,856.40
B. $2,014.07
C. $2,590.80
Correct Answer: B
(Or use the formula to calculate.)
FV = 255(1.04)6 + 255(1.04)5 + 255(1.04)4 + ... + 255(1.04)1 + 255(1.04)0 = $2,014.07
(Or use the formula to calculate.)
User Contributed Comments 3
| User | Comment |
|---|---|
| Indira | Using BA II Set the period to END (as this is a regular annuity) -255 PMT, 7 N, 4 I/Y,CPT FV = 2,014.07 |
| hpersey | Indira, I get 3409.43 using that method, |
| hpersey | Disregard that, I hadn't cleared my TVM worksheet.. |