@Shivani_maniac Pointers for L2?
Hi All, I have just started preparing for CFA Level 1 June 2013 Exam. Which subjects shall we cover first ? I read lot about ethics but I believe that can be covered a little later as it includes lot of things to be memorized. Any suggestions ? I am from Engg background. Thanks!
Guys can u'l name some good CFA classes in mumbai?
Thanks :D
Please tell me the solution of this question.
The Parks plan to take three cruises, one each year. They will take their first
cruise 9 years from today, the second cruise one year after that, and the third
cruise 1 1 years from today. The type of cruise they will take currently costs
$5,000, but they expect inflation will increase this cost by 3.5% per year on
average. They will contribute to an account to save for these cruises that will
earn 8% per year. What equal contributions must they make today and every
year until their first cruise (ten contributions) in order to have saved enough at
that time for all three cruises? They pay for cruises when taken.
cruise 9 years from today, the second cruise one year after that, and the third
cruise 1 1 years from today. The type of cruise they will take currently costs
$5,000, but they expect inflation will increase this cost by 3.5% per year on
average. They will contribute to an account to save for these cruises that will
earn 8% per year. What equal contributions must they make today and every
year until their first cruise (ten contributions) in order to have saved enough at
that time for all three cruises? They pay for cruises when taken.
Cost of first cruise: 5000(1+(3.5/100))^9= 6814.486
Cost of 2nd cruise: 6814.486(1.035) = 7052.993
Cost of 3rd cruise: 7052.993(1.035) = 7299.848
Total cost = 21167.329
You need to accumulate this amount in 9 years I.e first cruise.
Here you will have to use tvm function of calc.
Enter no. Of years - 9 and press 'N', percentage : 8 and press 'I/Y'. Enter zero for present value I.e 'PV' and final amount : 21167.329 into future value 'FV'. Now press CPT and then press PMT voila u get ur answer = 1695.073
Without tvm the concept applied is you contribute 1695.073 at first that becomes 1695.073*(1.08)^9 in 9 years. The amount you invest in 2nd year becomes 1695.073*(1.08)^8 and so on
So ultimately equation comes out to
Contribution (X) *(1.08^9 + 1.08^8...1.08^0) = 21167.329
You require calc to solve all questions neap. Tvm and fixed income. Go get it asap
You can use tvm function for cost of cruises too. Enter 9 for N(years). 3.5 in I/Y (interest), 5000 in PV and then CPT FV. for subsequent just enter 10 and 11 and CPT FV respectively
@kushalagg Answer is $1353.22. They had discounted the cost of cruise at 8% and then calculated the total present value at the start of first year.
You need
5000(1+(3.5/100))^9= 6814.486 9 years from now, for 1st cruise
6814.486(1.035) = 7052.993 10years from now, for 2nd cruise
7052.993(1.035) = 7299.848 11years from now for 3rd cruise
Taking each cruise independently
savings account should have 7299.848 11 years from now for the 3rd cruise, i.e it should have 7299.848/(1.08)^2 = 6258.44 9 years from now.
savings account should have 7052.993 10 years from now for 2nd cruise, i.e it should have 7052.993/1.08 = 6530.55 9 years from now.
savings account should have 6814.486 9 years from now for 1st cruise.
After 9 years, Savings account should have = (6258.44 + 6530.55 + 6814.486) = 19603.475.
FV = 19603.475
PV=0
I/Y =8
N=10 (total 10 contributions as given)
Therefore, PMT= 1353.22 
@mjmegha : Because the money is kept in savings account, which pays 8%.
It only means that, what amount should I keep in savings account for 1 year so that after 1 year it exactly equals the amount I need for purchasing the cruise.
@magnumopus22605 You are right. I did not interpret the question correctly. The cost of 2nd and 3rd cruises need to be discounted
Hello all,
I'm planning to register for CFA Level-1 within few days. Is credit card the only mode of payment? The problem is that my credit card limit is 30k and my agent denied chances of increasing the card limit. How did you guys manage it?
@saikcumar sadly tats the only way to register. U can ask ur frnds or some relative...no other way buddy.
@saikcumar Make a payment to your credit card equal to registration amount in excess of your card limit. This will increase your credit limit. Eg. If you make a payment if 20000 ur limit will be 50000. Say which is the registration amount
What about the memo or something else mentioned in the website?
You have to get a cheque or draft for the amount in USD and send it to CFA INSTITUTE USA
But trust me credit card is the best and hassle free method use it.