- CFA Exams
- CFA Level I Exam
- Topic 1. Quantitative Methods
- Learning Module 1. The Time Value of Money
- Subject 2. The Future Value and Present Value of a Series of Equal Cash Flows (Ordinary Annuities, Annuity Dues, and Perpetuities)

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**CFA Practice Question**

You have $10,000 in a savings account. You wish to make a withdrawal of $1,769.84 at the end of every year for the next 10 years. After the tenth withdrawal, the account will have a zero balance. How much must the savings account pay in interest per year?

A. 12%

B. 11%

C. 7%

**Explanation:**By calculator: PMT = $1,769.84; n = 10; PV = -$10,000.00; CPT i = 12%

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**User Contributed Comments**
1

User |
Comment |
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Kuki |
FV of $10000 for 10 yrs = PV of annuity of $1769.84 for 10 yrs. Equate the two and find r Answer r = 12.06% |