CFA Practice Question

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.

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.
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