SOLUTION: Ali contributed $1,000 per year for the past 9 years into an RRSP account, earning 3.8% compounded annually. If he leaves the accumulated contributions for another 5 years in the

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Question 1141813: Ali contributed $1,000 per year for the past 9 years into an RRSP account, earning 3.8% compounded annually. If he leaves the accumulated contributions for another 5 years in the RRSP at the same rate of interest,
a) How much will Ali have in total in his RRSP account?
b) How much did Ali contribute? c) How much will be the interest?
Answer by Theo(13342) About Me  (Show Source):
You can put this solution on YOUR website!
this is most easily solved with the use of a financial calculator.

using the TI-BA-II, i input the following:

pv = 0
fv = 0
pmt = -1000
n = 9
r = 3.8%

i then solve for fv to get fv = 10496.47936 ***** fv from first calculation.

pv = -10496.47936
fv= 0
pmt = 0
n = 5
r = 3.8%

i then solve for fv to get fv = 12648.2495 ***** fv from second calculation.

that's how much is in the account 5 years after the initial 9 year investment period is over.

on a year by year basis, this looks like this.

$$$

he contributed 9 * 1000 = 9000.

the interest he earned is 12648.2495 minus 9000 = 3648.2495.