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**CFA Practice Question**

How much interest would an original $500 deposit earn at 5% per year after 14 months? Assume monthly compounding.

A. $30.04

B. $29.97

C. $583.33

**Explanation:**The question only asks for the interest, not the ending balance. (1 + 0.05/12)

^{14}* 500 - 500 = 29.97.

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**User Contributed Comments**
3

User |
Comment |
---|---|

Kuki |
i would've surely tripped if 529.97 had been listed as an option. |

tijean25 |
I can't get that answer on the BA Ii plus. Can somebody break Dow what keys to press to get to that answer? |

Sheeb |
Sure Tijean25: N=14 I/Y=(5/12)0.4166666 PV= -500 (original deposit) PMT=0 Cpt FV=$529.96 Then you 529.96 - 500 = $29.96 This is how much interest in dollars you have earned. |