CFA Practice Question

There are 410 practice questions for this study session.

CFA Practice Question

What is the future value of the following regular (ordinary, deferred) annuity?

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

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.)

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..
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