- CFA Exams
- CFA Exam: Level I 2021
- Study Session 2. Quantitative Methods (1)
- Reading 6. The Time Value of Money
- Subject 4. 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**

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.)

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**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.. |