Page 20 - FINAL CFA I SLIDES JUNE 2019 DAY 2
P. 20
LOS 6.e: Calculate and interpret the FV & PV of a Session Unit 2: The Time Value of Money
single sum of money, an ordinary annuity, an annuity
due, a perpetuity (PV only), and a series of unequal Solving TVM Problems When Compounding Periods Are Other Than Annual
cash flows.
Using Financial Calculator:
Example: FV of a single sum using quarterly
compounding: Compute the FV of $2,000 today, five
years from today using an interest rate of 12%,
compounded quarterly.
Answer:
• N = 5 × 4 = 20; I/Y = 12 / 4 = 3; PV = –$2,000;
• CPT → FV = $3,612.22
