Page 57 - CFA - Day 1 & 2 Course Notes

LOS 6.e: Calculate and interpret the Session Unit 2: The Time Value of Money
future value (FV) and present value (PV)

of a single sum of money, an ordinary

annuity, an annuity due, a perpetuity (PV
only), and a series of unequal cash flows.

Future Value of a Single Sum

Example: Calculate the FV of a $300 investment at the end of ten years if it earns an

annually compounded rate of return of 8%.

Answer: This relatively simple problem could also be solved using the
10 = N; following equation:

I/Y = 8;

300 = PV; FV = 300(1 + 0.08)10 = $647.68
CPT →FV

= $647.68 On the TI calculator, enter 1.08 [yx] 10 [×] 300 [=].