Use These Shortcuts to Help with the CII R02 Exam
If you are taking the CII R02 exam and struggling with Chapter 4 (equally helpful for J10 and AF4), then here are a couple of short cuts you may or may not be aware of.
Georgia invests £10,000. The investment grows at 5% per annum. How much is it worth after 5 years?
This is a very common exam question. You can, of course, use your scientific calculator – if you have one – but if like a lot of us you just have your old faithful manual one, here are four easy steps to working this through:
Step 1 = enter the interest rate as a decimal plus 1 – so 1.05.
Step 2 = press the multiplication key (once or twice depending on your calculator, you will need to experiment).
Step 3 = enter present value £10,000.
Step 4 = press the = button the number of times that matches the number of time periods.
The answer is £12,763.If you are taking the CII R02 exam and struggling with Chapter 4, this article will help. Click To Tweet
And if you need to do a discounting calculation:
Georgia made an investment 5 years ago, which has grown by 5% per annum and is now worth £12,763. How much did she originally invest?
Step 1 = enter the future value of £12,763 into your calculator.
Step 2 = press (divide) once or twice depending on your calculator (experiment to see what works).
Step 3 = enter interest rate as a decimal plus 1 – i.e. 1.05.
Step 4 = press the = button the number of times that matches the number of time periods i.e. 5.
The answer is £10,000.
Chapter 4 may only be worth a few marks in R02, but why not ensure you get them by using these quick shortcuts?
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