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Basic Question 5 of 6
An individual deposits $1,000 today, $1,200 one year from today, and $1,500 two years from today into an interest-earning account. The deposits earn 10% compounded annually. Find the total accumulated amount in his account three years from today.
User Contributed Comments 15
| User | Comment |
|---|---|
| danlan | We get NPV=3027.8, the the future value=NPV*1.1^4=4433 |
| chuong | Try it again Co=1000, C1=1200, C2=1500, I=10 =>NPV=3330.57581 then PV=-33057581, I/Y=10, N=3 => FV = 4433 |
| Rotigga | Great tip, chuong! |
| julescruis | nice one |
| thekapila | well here is the correct way to do it. C0 = -1000 C1 = -1200 C2 -1500 I - 10 CMPT NFV - 4433 |
| StanleyMo | This questions is tricky: you have in fact t=0, t=1, and t=2 bank in but they want you to calculate the total amount at t =3 instead of t=2. thats why we are using C1, C2 and C3 with the C1 = 1100 ( not 1000!, that is t=0) |
| TammTamm | Thanks for the two step process chuong. Makes sense now. |
| SANTOSHPRABHU | Using BA II Plus: 2nd reset enter 2nd QUIT: 0.00 CF: CFo = previous value 2nd CLR WORK: CFo = 0.00 1000 ENTER: CFo = 1,000.00 DownArrow: C01 = 0.00 1200 ENTER: C01 = 1,200.00 DownArrow: F01 = 1.00 DownArrow: C02 = 0.00 1500 ENTER: C02 = 1500.00 DownArrow: F02 = 1.00 NPV: I = 0.00 10 ENTER: I = 10.00 DownArrow: NPV = 0.00 CPT: NPV = 3330.58 Thus PV = -3,330.58 N=3 I/Y=10 CPT > FV = 4433.00 |
| VT2010 | can someone solve this one with hp12c please regards vishal |
| ThanhBUI | short cut possible only if identical rates |
| johntan1979 | Throw away your HP12C |
| chipster | got the same thing danlan. |
| jonan615 | HP12C: 1000 [g][cf0] 1200 [g][cfj] 1500 [g][cfj] 10 [i][f][npv] [enter][enter] 1.10 [enter] 3 [y^x] [times] = 4432.99 |
| coryrmoore | Thanks Jonan |
| sshetty2 | I didn't read the question properly, u actually have to calculate the nfv then add the interest for another yr |
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Learning Outcome Statements
calculate and interpret the present value(PV) of fixed-income and equity instruments based on expected future cash flows
calculate and interpret the implied return of fixed-income instruments and required return and implied growth of equity instruments given the present value (PV) and cash flows
CFA® 2024 Level I Curriculum, Volume 1, Module 2.