CFA Institute Exam CFA-Level-I Topic 1 Question 12 Discussion

Actual exam question for CFA Institute's CFA-Level-I exam

Question #: 12
Topic #: 1

If you have $5,000 in an account today and withdraw $2,000 in 3 years, how much can you withdraw from the account in 5 years, if the account earns interest at 8% per year, compounded annually?

A$3,000.00

B$5,013.84

C$4,407.98

D$5,714.93

E$2,000.00

Show Suggested Answer

Suggested Answer: C

by Arlette at Jan 23, 2025, 05:22 PM

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King

17 days ago

This seems like a straightforward interest calculation problem. I just need to figure out the balance after 5 years and then subtract the $2,000 withdrawal. Easy peasy!

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Martina

23 days ago

Exactly, we can use the formula A = P(1 + r)^n to calculate the future value of the account.

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Okay, let's see. If I have $5,000 and withdraw $2,000 in 3 years, and the account earns 8% interest annually, that means I'll have more than $5,000 left in 5 years. I'll just need to calculate the exact amount.

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Mariann

10 days ago

You can withdraw $5,440 in 5 years.

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Pearlene

29 days ago

Yes, we can use the formula for compound interest to find out how much we can withdraw in 5 years.

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Martina

30 days ago

I think we need to calculate the future value of the account.

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CFA Institute Exam CFA-Level-I Topic 1 Question 12 Discussion

Contribute your Thoughts:

King

Martina

Monroe

Mariann

Pearlene

Martina