CFA Practice Question

CFA Practice Question

What single deposit could you make today in order to have $1,000,000 in 30 years, assuming it earns interest at 11% per year, compounded monthly?
A. $9,523.23
B. $37,441.83
C. $43,682.82
Explanation: On the BAII Plus, press 360 N, 11 divide 12 = I/Y, 0 PMT, 1000000 FV, CPT PV. On the HP12C, press 360 n, 11 ENTER 12 divide i, 0 PMT, 1000000 FV, PV. Note that the answer is displayed as a negative number. Make sure the BAII Plus has the value of P/Y set to 1.

User Contributed Comments 7

User Comment
lwang014 "compounded monthly" is the key
bawejate or you can go
36 N
FV 1000,000
PMT 0
I/Y 11
P/Y set to 12

PC CPT= 37,441
Frehner bawejate means 30 N not 36 N
kellyyang 36N is right! You know 30*12=360 N , remember is monthly !
MylesGrenier I just found the monthly compounded EAY and put that in I/Y.

So (1 + [.11/12])^12 - 1 = 11.57188%
JeffAu If you do it the way Bawejate is doing, N needs to be 360 not 36.
abs013 BAIIPlus

N= 30 * 12 = 360
I/Y= 11/12 = 0.9167
FV= 1,000,000.00
CPT PV = -37,441.83
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