# Thread: Free CFA Level 1 practice question bank for June 2011 exam

1. Q11 Ans B:

This problem is related to annuity due. Either solve through the begin mode [BEG] or [BGN] in calculator or you can solve in the following way:

Take the first installment as the PV and the next 9 installments as the regular payment for the ordinary annuity, but the future value that you get here will be at the end of year 9 and then you have to find the future value at the end of 10th year.

PV = -10K, PMT=--10K, I/Y=8, N=9=> FV9 = 144,865
Now calculate the FV10= 144,865*1.08 =156,454.8

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Today's Question (Questions and answers provided by Knowledge Varsity)

Q12. I am buying a house for \$100,000. I paid 15% cash as down payment and took loan for rest of the money. The loan term is 15 years and interest rate is 8% p.a. What is the EMI that I have to pay on this home loan. Assume end of the month payments are done.

A. \$955.6
B. \$807.9
C. \$812.3

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2. A12 - c

3. Agree with sfernezian...Ans is C

4. Q12 Ans C:

Loan taken = \$85,000 => PV = -85,000, N= 15*12 = 180, I/Y = 8/12 = .6667

FV = 0; Find the PMT => 812.3

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Today's Question (Questions and answers provided by Knowledge Varsity)

Q13. Your uncle consults with you about his retirement 10 years from now. He currently has \$1 million to invest. Over the next 10 years he will withdraw \$20,000 from his investments every year (withdrawals done at the end of the year). After retiring 10 years from now, he will withdraw an amount \$X every year so that he has zero savings at the end of 15 more years (that is 25 years from today and he expects that Social Security will pay for his expenses if he lives beyond that point). Withdrawals for each year are made at the end of each year. Investments earn a 7% return per year, and there are no taxes.

What will be the value of your uncle’s investments at the end of the 10th year (after withdrawal for the 10th year has been made)?

A. 1,690,822
B. 859,528
C. 2,243,480

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5. A13 - a

6. Q13 Ans A:

PV = \$1 mn,
PMT = -20K,
I/Y = 7% ,
N=10

find FV=-1,609,822

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Today's Question (Questions and answers provided by Knowledge Varsity)

Q 14 A man completed 30 years today and he is planning to retire at the age of 50. He has estimated that he will be alive till the age of 80 and he require \$5000 per month during the retirement period. Before retiring he keep money in an investment account which provides 10% per annum return , but he transfer all the wealth in risk free savings account on retirement, which provides only 5% return. How much should he save monthly in an investment account so that he is able to fulfill his wish? He start savings from the next month.

A. \$1,227
B. \$750
C. \$2,266

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7. A14 - a

8. Q14 Ans A.

First find the PV at the age 50 of the payments that are received during retirement.

PMT = \$5000,
I/Y = 5/12,
N = 360,
FV = 0 => CPT->PV = \$931,408.09

Next, taking this PV as FV find out the PMT
FV = \$931,408.09,
PV = 0,
I/Y = 10/12,
N = 240 => CPT -> PMT = \$1,227

You get B if you use 10% rate during retirement and you get C if you use 5% during working time

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Today's Question (Questions and answers provided by Knowledge Varsity)

Q 15 Tata Steel's diluted earning per share (EPS) in the last 6 years are, INR 50, INR 60, INR 65, INR 69, INR 76 and INR 78. At what annual compound rate the EPS grew in last 6 years.

A. 11.2%
B. 9.3%
C. 5.6%

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9. A15 - b

10. Originally Posted by DG Mod
Q14 Ans A.

First find the PV at the age 50 of the payments that are received during retirement.

PMT = \$5000,
I/Y = 5/12,
N = 360,
FV = 0 => CPT->PV = \$931,408.09

Next, taking this PV as FV find out the PMT
FV = \$931,408.09,
PV = 0,
I/Y = 10/12,
N = 240 => CPT -> PMT = \$1,227

You get B if you use 10% rate during retirement and you get C if you use 5% during working time

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Today's Question (Questions and answers provided by Knowledge Varsity)

Q 15 Tata Steel's diluted earning per share (EPS) in the last 6 years are, INR 50, INR 60, INR 65, INR 69, INR 76 and INR 78. At what annual compound rate the EPS grew in last 6 years.

A. 11.2%
B. 9.3%
C. 5.6%

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B

(28/50)/6 appr